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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Thursday, 29 April 10
KANGAROO RESOURCES INKS KEY COAL EXPORT CONTRACT WITH YUDEAN FARNON - PROACTIVE INVESTORS
Proactive Investors reprted that, Kangaroo Resources has secured an initial export sales contract for coal from the company’s operating coal p ...
Wednesday, 28 April 10
UNITED TRACTORS FOCUSES ON MINING AS IT SEEKS TO DIVERSIFY REVENUE SOURCES - JG
The Jakarta globe reported that, PT United Tractors, Indonesia’s biggest heavy-equipment distributor and mining contractor, aims to have its m ...
Wednesday, 28 April 10
DRY BULK MARKET
After a prolonged period of anticipation and a stalled dry bulk market in terms of freight rates, the industry’s benchmark, the Baltic Dry Ind ...
Tuesday, 27 April 10
CAPESIZES UP, PANAMAXES DOWN - BRS
It was Capesizes up, Panamaxes down this week as the latter experienced a correction after its recent gains. Period rates for Panamaxes remain firm ...
Tuesday, 27 April 10
S.KOREA EWP SEEKS 0.520 MILLION TONS OF SUB-BITUMINOUS COAL
COALspot.com: South Korea East West Power Company has called for term bids for supply of Sub-bituminous Coal for Dangjin Thermal Power Pla ...
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- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- London Commodity Brokers - England
- The University of Queensland
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
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