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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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Tuesday, 12 June 12
ITACHA RESOURCES BUYS SARANA MARINE - INSIDER STORIES
Insider Stories reported that, coal mining company PT Itacha Resources, a joint venture between Anthoni Salim and Glenn Yusuf, announced that Itacha ...
Monday, 11 June 12
BAHANA FORECASTS THE COAL PRICES WILL FALL FURTHER
COALspot.com - Growing US coal supplies + low shipping costs = Asia as target.
According to Irwan Budiarto analyst at Bahana Securities, US ...
Monday, 11 June 12
ASIAN COAL TRADING COMMUNITY EMBRACES API 5 AND API 8
Press Release - The Asian coal trading community is embracing the API 5 and API 8 indexes for its swap contracts.
The API 5 index represents 5,50 ...
Sunday, 10 June 12
FREIGHT MARKET EXPECTED TO REMAIN WEAK FOR NEXT FEW WEEKS - VISTAAR
COALspot.com - The BDI continued to fall this week and down by 2.99 pct closing at 877 points.
The Cape index also was down by 5.78 pct closing a ...
Friday, 08 June 12
ESSAR ENERGY RECEIVES FINAL APPROVAL FOR INDONESIAN COAL BLOCK
COALspot.com - Essar Energy plc, the India-focused integrated energy company, today announced that it has received final ‘Pinjam Pakai’ ...
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- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
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- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- MS Steel International - UAE
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Parliament of New Zealand
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