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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, 20 November 11
THE FREIGHT MARKETS EXPECTED TO BE FIRM NEXT WEEK - VISTAAR
COALspot.com - The market continued to move up with all sectors gaining except for handy size.
The BDI was up by 3.26 pct and closed at 1895 poin ...
Friday, 18 November 11
MMTC SEEKS 1.365 MMT OF IMPORTED COAL
COALspot.com - India's MMTC, the largest trading company of India and a major trading company of Asia, has issued a term supply tender for 1.365Mt ...
Friday, 18 November 11
KPC, ARUTMIN OUTPUT REACHED 47.1 MIO TONS - INSIDER STORIES
PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia, reported 47.1 million tons of coal production in 9M 2011, according to Indiser Stories.
Insi ...
Friday, 18 November 11
THE ATLANTIC SUPRAMAX MARKET EXPERIENCED A STEADY AND FIRM TENDENCY
Handy
The Atlantic Supramax market experienced a steady and firm tendency this week. Especially the North Atlantic and Mediterranean position ...
Friday, 18 November 11
BERAU COAL 9M PROFIT SOARS 194.46% - INSIDER STORIES
Insider Stories reported that, PT Berau Coal Energy Tbk (BRAU), which is 84.7% owned by Bumi Plc, reported a 194.46% jump in net profit by end of Se ...
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- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Economic Council, Georgia
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Australian Coal Association
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- White Energy Company Limited
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
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