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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, 12 March 12
DELTA DUNIA 1M OVERBURDEN DROPS 3.1% - INSIDER STORIES
Insider Stories reported that, Indonesia's second largest coal mining contractor PT Delta Dunia Makmur Tbk (DOID) reported a 25 million bank ...
Monday, 12 March 12
DRY BULK RATES WILL REMAIN LOW IN 2012 SAYS DANISH SHIP FINANCE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its annual shipping survey Danish Ship Finance said that the current outlook for the Dry Bulk market seems unlikely to foster higher rates in any ...
Monday, 12 March 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The first days of March appear to be more encouraging for dry bulk operators, but the outlook is still gloomy for the rest of year with earnings for ...
Sunday, 11 March 12
FREIGHT RATES FOR INDONESIA TO INDIA WILL CONTINUE TO REMAIN FIRM- VISTAAR
COALspot.com - This week saw another upward trend with all indices up except for the Cape index.
The BDI was up by 6.87 pct closing at 824 points ...
Friday, 09 March 12
MINING IN INDONESIA: RESTRICTION ON FOREIGN INVESTMENT - SUNIL K KUMBHAT
COALspot.com - Recently Govt has passed regulation instructing foreign mining companies to reduce their ownership stake.
The regulation known as ...
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- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- PTC India Limited - India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
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