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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, 02 January 12
THE PROMISE OF INDIA: A BRIEF INTERRUPTION? - CLARKSONS / HELLENIC SHIPPING
Future growth in Indian seaborne coal imports has sometimes been considered as one of the largest potential upsides in the currently oversupplied dr ...
Sunday, 01 January 12
IS INDIA FOLLOWING INDONESIA TO STANDARDIZE COAL PRICES TO GET MAXIMUM BENEFITS?
COALspot.com - Coal India limited, an Indian state owned and world largest coal producer has introduced gross calorific value (GCV) based pricing me ...
Saturday, 31 December 11
GLOBALCOAL NEWC INDEX SURGED 2.32 PERCENT
COALspot.com - globalCOAL index in Newcastle Port, benchmark for Asian market, ended substantially higher, surged 2.32 percent to US$115.47 per ...
Saturday, 31 December 11
BORNEO LUMBUNG TO BUY BUMI STAKE, SWAP CEO - THE JAKARTA GLOBE
The Jakarta Globe, one of the leading english news paper in Indonesia reported yesterday, shareholders of Indonesian coking coal miner Borneo Lumbun ...
Friday, 30 December 11
CENTRAL GOVERNMENT SHOULD ISSUE PERMITS - THE JAKARTA POST
The Jakarta Post reported that, business associations from both the palm oil and mining sectors have suggested that the central government should re ...
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- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Central Electricity Authority - India
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- VISA Power Limited - India
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Australian Coal Association
- MS Steel International - UAE
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
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