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