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