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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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Sunday, 25 December 11
THERMAL COAL PRICES GAINED UP TO 4.32 PERCENT
COALspot.com - globalCOAL index gained 4.32 percent to US$106.36 per ton in RBCT, benchmark for South Asia and West Europe markets, for the week end ...
Saturday, 24 December 11
CHINAS LEVEL OF GROWTH TO DETERMINE COURSE OF DRY BULK MARKET IN 2012 SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest report, shipbroker Intermodal attempted to find a silver lining in the tough year that was 2011, as well as what one could expect from ...
Friday, 23 December 11
SPOT PACIFIC CAPESIZE VESSELS HAVE COMMANDED HIGH PREMIUMS - FEARNLEYS
Handy
Rates in the Atlantic kept stable from last week, with a touch of negativity closer to the end. Less spot cargoes seen, and owners are ...
Friday, 23 December 11
CONTENTIOUS ISSUES IN CONTRACT RENEGOTIATION - THE JAKARTA POST
The government has been renegotiating mining contracts, especially those 30-40 years old, with almost all mining companies, including PT Freeport In ...
Friday, 23 December 11
LANCO JOINS HANDS WITH BUKIT ASAM FOR INDONESIAN POWER PROJECT
COALspot.com - PT Tambang Batubara Bukit Asam, Indonesia's state owned coal miner and Indian based Lanco Infratech Ltd plans to build steam power p ...
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- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- White Energy Company Limited
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
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