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