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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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Thursday, 15 March 12
RESOURCE ALAM FY11 PROFIT UP 171% - INSIDER STORIES
Insider Stories reported that, coal mining company PT Resource Alam Indonesia Tbk (KKGI) reported a 171.16% jump in net profit last year on the back ...
Wednesday, 14 March 12
GLOBAL THERMAL TRADE FLOW CHANGES WILL ENSURE SECURITY OF THERMAL COAL SUPPLY, ALBEIT AT A HIGH PRICE - WOOD MACKENZIE
Wood Mackenzie Says Global Thermal Trade Flow Changes Will Ensure Security of Thermal Coal Supply, Albeit At a High Price Seaborne thermal demand by ...
Wednesday, 14 March 12
COKAL TAKES ANOTHER STEP IN DEVELOPING INFRASTRUCTURE TO FACILITATE METALLURGICAL COAL PRODUCTION
Global coal group, Cokal Limited (ASX-CKA), has signed Memorandums of Understanding (MoU’s) to develop two river ports and two small scale coa ...
Tuesday, 13 March 12
CLARIFICATION OF GR 24 OF 2012 REQUIRING DIVESTMENT OF FOREIGN OWNERSHIP OVER TIME
ASX Announcement
Global metallurgical coal group, Cokal Limited (ASX-CKA), is responding to the recent announcement of the Indonesian Ministry of ...
Tuesday, 13 March 12
EUROPEAN COAL CONTANGO: FURTHER STEEPNESS REQUIRED TO MAKE LARGE SCALE PHYSICAL TIME SPREAD ARBITRAGE MORE ATTRACTIVE - MISWIN MAHESH, BARCLAYS CAPITAL
COALspot.com - "With the contango between the Y+1 and M+1 ARA delivered contract now averaging above the $14/t level, there is an increasing in ...
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- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- White Energy Company Limited
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
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