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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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Friday, 26 February 10
BANPU PROFITS SURGE BY 54% TO RECORD B14BN ON BRISK SALES
Banpu Plc, Asean's largest coal miner, said its earnings surged to a record high of 14.23 billion baht last year, an increase of 54% on the previou ...
Thursday, 25 February 10
INDO / INDIA COAL TRIPS SUPRAS CAN ACHIEVE AROUND MID 10S - FEARNLEYS AS
Handy
The BSI regained positive momentum exactly a week ago and the Atlantic rema ...
Thursday, 25 February 10
STEEP RISE IN COAL IMPORTS REQUIRED TO POWER INDIA - MONEYLIFE
The power ministry has estimated coal imports of 48 million tonnes in FY10-11, sharply higher than the expected imports of 28mt in the current fisca ...
Wednesday, 24 February 10
CHINA IMPORTED 8.81 MLN TONS OF INDONESIAN COAL IN JANUARY 2010
COALspot.com: Indonesia, the world largest coal exporter, exported 24.38 million tons of coal last month, compared with 27.46 million tons in a ...
Tuesday, 23 February 10
TRENDS..... DRY BULK MARKET .... TRENDS
The dry bulk market was pulled along by the Capes this week, as fresh enquiry breathed temporary life back into the market. Short period rates also ...
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- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- The University of Queensland
- Indonesian Coal Mining Association
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
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