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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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Wednesday, 31 March 10
DRY BULK MARKET STILL MODERATELY FALLING, BUT POSITIVE SIGNS APPEAR ON THE HORIZON - HELLENIC SHIPPING
The irregularities of the current dry bulk market have been more than evident in the fact that panamax vessels today earn more than their larger cap ...
Wednesday, 31 March 10
INDIKA ENERGYS PROFIT HIT BY FOREX LOSS AND CABOTAGE - THE JAKARTA GLOBE
The Jakarta Globe reportd that, PT Indika Energy posted a 30 percent drop in 2009 net profit due to a foreign exchange loss and impairment of intang ...
Wednesday, 31 March 10
ITMG TO UP COAL OUTPUT DESPITE PERMIT PROBLEMS - THE JAKARTA POST
The Jakarta Post reported that, the country’s third largest coal producer PT Indo Tambang Raya Megah (ITMG) said it can raise output although ...
Tuesday, 30 March 10
ANALYST SEES BDI LIFT, SUGGESTS DRY BULK SHORT SQUEEZE
Analysts at Credit Suisse are bullish on Diana and see a potential short squeeze elsewhere in the sector. The Baltic Dry Index (BDI) -- an industry ...
Tuesday, 30 March 10
CHINA'S DROUGHT RAISES COAL PRICES, LOWERS HYDROPOWER
Bloomberg reported that, Benchmark coal prices at Qinhuangdao, China’s largest port handling the fuel, rose for the first time in 10 weeks aft ...
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- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Indika Energy - Indonesia
- Planning Commission, India
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Deloitte Consulting - India
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