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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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- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- VISA Power Limited - India
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
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