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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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Friday, 28 October 11
RISING COAL PRICES TO WORSEN CHINA'S WINTER POWER CRUNCH - CRI ENGLISH
CRI English reported that, the rising price of coal is fueling concerns about a power crunch set to plague China this winter, analysts said.
The ...
Thursday, 27 October 11
CAPESIZE REACHING NEW HIGHS - FEARNLEYS
Handy
Pacific market has mixed sentiments with tonnages fixed at firm levels and some tonnages in feast failing on subs.For indo-india, large eco ...
Thursday, 27 October 11
DRY BULK MARKET EDGES DOWN AS CHINAS IRON ORE DEMAND LOSES GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A plunge in Chinese iron ore demand, as a result of high steel inventories and a bleak outlook regarding steel prices, has prompted the dry bulk mar ...
Thursday, 27 October 11
BUKIT ASAM 3Q PROFIT SURGES 66.91%
Insider Stories reported that, the state-controlled coal miner PT Bukit Asam Tbk (PTBA) experienced a 66.91% increase in its net profit during a per ...
Wednesday, 26 October 11
MOODYS SEES MORE GROWTH FOR INDONESIAN COAL MINERS - THE JAKARTA GLOBE
The Jakarta Globe reported that, Indonesia’s coal mining industry looks set to grow despite an uncertain global economic outlook, according to ...
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- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Australian Coal Association
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
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