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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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Saturday, 25 August 12
FREIGHT RATES ARE EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - This week the indices showed some signs of improvement will all the segments moving up except for the handy size.
The BDI was marg ...
Saturday, 25 August 12
INDONESIAN COAL SWAP REMAINS STABLE AT LOW LEVEL
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for October 2012 delivery gain 0.804 percent W-o-W on Friday (24 August 2012) closing but lost 0. ...
Thursday, 23 August 12
INDONESIA-INDIA, LARGE ECO SUPRA FIXED AT USD 6K FOR DELIVERY SOUTH CHINA - FEARNLEYS AS
Handy
The market continued the same trend as last week, low activity and holidays in some countries.
Rate wise unchanged, with US Gulf/Continent ...
Thursday, 23 August 12
EGCO GROUP EXPANDS TOWARDS INTEGRATED ENERGY BUSINESS WITH INVESTMENT IN INDONESIAS COAL MINE
Electricity Generating Public Company Limited or EGCO Group, the Thailand’s first Independent Power Producer has continually invaded foreign m ...
Thursday, 23 August 12
EGCO GROUP ANNOUNCES 2 BILLION BAHT PROFITS IN Q2/2012
Successfully Establishes Integrated Energy Business and Strengthen Investments in ASEAN
Mr. Sahust Pratuknukul, President of Electri ...
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- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Economic Council, Georgia
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
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