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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, 24 January 12
BUKIT ASAM FY11 NET PROFIT SURGES 50% - INSIDER STORIES
Insider Stories reported that, the state-controlled PT Bukit Asam Tbk (PTBA) estimated to book Rp3 trillion (approximately US$ 335,570,469) net prof ...
Sunday, 22 January 12
FREIGHT MARKET DROPPED TO THE LOWEST LEVEL SINCE 2008
COALspot.com - "The markets continued to soften almost reaching 2008 levels breaking the 1,000 point mark", said Capt. Reddy of Vistaar Sh ...
Saturday, 21 January 12
ASIAS PREMIER COMPREHENSIVE OPEN CUT MINING CONFERENCE SCHEDULED FOR FEBRUARY 2012
As the only such conference in the region for miners and service providers, IBC Asia’s Open Cut Mine Planning & Operational Excellence con ...
Saturday, 21 January 12
COAL MARKETS CELEBRATES A DECADE OF BRINGING BUYERS & SELLERS TOGETHER
In 2012, IBC Asia’s premier Coal Markets conference series – Asia’s only globally focused coal import, export and supply chain eve ...
Saturday, 21 January 12
SAMIN TAN COMPLETES BUMI PLC TAKEOVER - INSIDER STORIES
Insider Stories reported that, Indonesian coking coal miner PT Borneo Lumbung Energi & Metal Tbk (BORN), that is controlled by stellar businessm ...
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- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Parliament of New Zealand
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Australian Coal Association
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- The University of Queensland
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
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