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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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Monday, 06 August 12
3RD ANNUAL INDONESIA POWER
Press Release - 3rd Annual Indonesia Power is Indonesia’s premier power event, where commercial opportunities and new projects are identified. ...
Monday, 06 August 12
COAL EXPORTS COULD ADD $2B TO $6B ANNUALLY TO U.S. ECONOMY - HELLENIC SHIPPING
Business groups backing Pacific Northwest coal export proposals on Thursday lauded a new report that claims increased U.S. coal exports could bring ...
Sunday, 05 August 12
SUB-BIT INDONESIA COAL SWAPS ARE WAY UP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for September 2012 delivery gain 1.36 percent on Friday (3 August 2012) closing W-o-W but gained& ...
Sunday, 05 August 12
INDONESIA'S ADARO TRIMS PRODUCTION FORECAST, CITES BAD ECONOMY - THE JAKARTA GLOBE
The Jakarta globe reported that, Adaro Energy, the country’s second-largest coal producer, has cut its annual production forecast to between ...
Sunday, 05 August 12
DRY BULK FREIGHT MARKET TO STAY WEAK NEXT COUPLE OF WEEKS - VISTAAR
COALspot.com - The freight market continued to soften further in all segments.
The BDI was down by 8.68 pct closing at 852 points. The cape index ...
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- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
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- The University of Queensland
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- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Parliament of New Zealand
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- Sical Logistics Limited - India
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- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
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- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
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- Indian Energy Exchange, India
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- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
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- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
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- Global Green Power PLC Corporation, Philippines
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- Bhoruka Overseas - Indonesia
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- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
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- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
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