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