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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, 09 October 09
INDIKA IN TALKS TO SELL 4M TONS OF COAL, EYEING BP ASSETS
The Jakarta Post reported that, Energy company PT Indika Energy is in talks with Indian buyers to sell 4 million tons of coal next year, one of its ...
Friday, 09 October 09
BULK-SHIPPING LINES MUST CANCEL 50% OF NEW ORDERS, PLATOU SAYS
Bloomberg reported that, Bulk-shipping lines need to cancel half of the new vessels they have on order to ease a capacity glut and revive freight ra ...
Friday, 09 October 09
THE BALTIC DRY INDEX WOKE UP: DRY BULK MARKET ON THE RISE
Hellenic Shipping News reported that, In what could prove the beginning of a new and sustainable rally for the dry bulk market, the BDI (Baltic Dry ...
Friday, 09 October 09
STRAITS ASIA INDONESIAN MINE COAL LOADER COLLAPSES
* New coal loading facility collapsed due to heavy rain
* Older coal loading facility seem unaffected so far
* UBS may cut valuation if disruption ...
Thursday, 08 October 09
COAL INDIA SAYS IMPORTS COULD JUMP 10 TIMES IN 3 YRS
Reuters reported that, Coal imports by state explorer Coal India Ltd could jump 10 times to 40-45 million tonnes in three years to meet a sharp rise ...
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- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Parliament of New Zealand
- ASAPP Information Group - India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- White Energy Company Limited
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Economic Council, Georgia
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- PTC India Limited - India
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
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