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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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Friday, 27 January 12
DEMOLITION ACTIVITY NEEDS TO INCREASE SIGNIFICANTLY THIS YEAR AS WELL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The oversupply of vessels in most shipping sectors is so intense that it’s become clear to ship owners that unless they scrap as many of their ...
Thursday, 26 January 12
ABM INVESTAMA SEALS US$100 MIO CONTRACT - INSIDER STORIES
Insider Stories reported that, PT Reswara Minergi Hartama, a subsidary of PT ABM Investama Tbk (ABMM), has sealed a 2 million tons of coal export co ...
Thursday, 26 January 12
DRY BULK MARKETS DOWNFALL KNOWS NO LIMITS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s demise seems to have no visible end, as China’s Lunar Year Holidays continue this week, thus leaving demand with n ...
Wednesday, 25 January 12
CLEAN AND CLEAR MINING PERMITS TO BE COMPLETED END OF 2012 - BISNIS.COM
Bisnis.com reported that, the government plans to announce 700 mining permits with "clean and clear" status without overlapping on other p ...
Tuesday, 24 January 12
ANOTHER SEVERE DROP IN THE CAPESIZE - BRS
The lunar year celebrations and the high number of new building deliveries (more than 35 Capes so far in January as owners push 2011 deliveries into ...
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- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Australian Coal Association
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Economic Council, Georgia
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
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