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