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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, 11 August 12
INDONESIAN COAL REFERENCE PRICE HAS LOST 27.78 PERCENT YOY
COALspot.com - Indonesian HBA fell again in August.
The monthly coal reference price for coal sales this month fell 3.32 percent. HBA fell ...
Saturday, 11 August 12
SUB-BIT INDONESIA COAL SWAPS SEEN MOVING IN THE RIGHT DIRECTION
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for September 2012 delivery gain 1.29 percent W-o-W on Friday (10 August 2012) closing but lost 1 ...
Friday, 10 August 12
DRY BULK MARKET DROWNING FROM TONNAGE OVERSUPPLY - HELLENIC SHIPPING
The dry bulk market has been overflowing with new building vessels, despite the fact that demand is more or less (and minus the seasonal factors) ri ...
Thursday, 09 August 12
3RD ANNUAL SHALE GAS
Press Release - With the North American shale gas boom, IBC’s 3rd Annual Shale Gas explores optimal strategies to monetize Asia’s domest ...
Wednesday, 08 August 12
EXPLOITASI AIMS TO RAISE RP 2.7T FOR ACQUISITION - THE JAKARTA POST
The Jakarta Post reported that, publicly listed coal miner PT Exploitasi Energi Indonesia (CNKO) is seeking to raise Rp 2.7 trillion (US$286.2 milli ...
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- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Minerals Council of Australia
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Indian Energy Exchange, India
- The Treasury - Australian Government
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
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