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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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- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- The University of Queensland
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- SMC Global Power, Philippines
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
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