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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, 22 November 11
NTPC TO BUY 2 MMT OF IMPORTED COAL FOR ITS FOUR PLANTS
COALspot.com - NTPC Limited, incorporated in 1975 as a public sector company wholly owned by Government of India, the largest thermal power generati ...
Tuesday, 22 November 11
ABM INVESTAMA SETS IPO AT RP 3,750
Insider Stories reported that, Integrated energy company PT ABM Investama Tbk has determined the IPO price at Rp3,750 (approximately US$ 0.415) per ...
Tuesday, 22 November 11
A SURPRISINGLY STRONG WEEK FOR THE CAPES - BRS
Positive gains for most of the segments this week, the exception being the Handysizes. Overall the BDI ended the week at 1,895 points (+3.3% week-on ...
Tuesday, 22 November 11
APPETITE FOR DRY BULK VESSELS SLOWS DOWN AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was down at the beginning of the week, as demand for Capesize vessels was particularly low. The industry’s benchmark, the ...
Monday, 21 November 11
CAPESIZES DRIVE MARKET LOWER, ANALYSTS DIVIDED ON DRY BULK OUTLOOK IN THE LONG RUN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market ended the week on a sour note, with the industry’s benchmark heading downwards to 1,895 points, which represented a slight ...
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- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Minerals Council of Australia
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- Australian Coal Association
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
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