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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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Wednesday, 04 April 12
CHURCHILL MINING TO ACCELERATE INTERNATIONAL ARBITRATION AGAINST INDONESIA
Churchill Mining plc (AIM: CHL), advises that notations on the Indonesian Supreme Court's register of cases shows the Supreme Court has rejected th ...
Monday, 02 April 12
BANGLADESH EYEING INDONESIA FOR COAL
COALspot.com - The high level executives of Center for Environmental and Geographic Information Services (CEGIS) of Bangladesh is visiting Ind ...
Monday, 02 April 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The first quarter of the New Year ended with the BDI standing 42% above from the 26 years’ bottom low of 662 points on February 1st, and a pos ...
Saturday, 31 March 12
THE BDI CONTINUED TO MOVE UPWARD - VISTAAR
COALspot.com - The BDI continued to move upward and rose by 2.86 pct closing at 934 points.
The cape index was up by 3.14 pct closing at 1,412 po ...
Saturday, 31 March 12
SRI LANKA IMPORTS 152,555 MT OF INDONESIAN COAL IN FEBRUARY
COALspot.com: Indonesia, the world largest coal exporter, shipped 27.126* million tons of coal in February 2012, compared to 28.21* million to ...
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- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- The University of Queensland
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
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