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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, 26 June 14
COAL DIVESTMENT CAMPAIGNS COME WITH RISKY UNINTENDED CONSEQUENCES - WCA
Last week I presented to the Expert Group on investments in coal and petroleum companies, the body set up to advise the Norwegian Government on whe ...
Wednesday, 25 June 14
INDONESIAN COAL EXPORTS ON RISE; EARNINGS FALL ON LOWER SELLING PRICES
COALspot.com: Indonesia, one of the world's largest coal producer and the global largest multi grade coal exporter shipped around $1.84* ...
Wednesday, 25 June 14
THE PANAMAX MARKET REACHED FRESH LOWS FOR THE YEAR, SAYS INTERMODAL
COALspot.com: The Dry Bulk market closed off the week noting a slight decrease, but this image of stability is merely representative of freight rat ...
Wednesday, 25 June 14
SHIPPING: MARKET INSIGHT - YANNIS OLZIERSKY
During his recent visit in London, China's Premier, Li Keqiang, announced that China's economy, the world's second largest after the US ...
Tuesday, 24 June 14
INDONESIAN COAL MINER TARGETS RP 313 BILLION IPO
COALspot.com: Indonesian coal miner PT Mitrabara Adiperdana is aiming to raise up to Rp 313 billion to Rp 368 billion (approximately $26.133 millio ...
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- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- The University of Queensland
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
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