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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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Wednesday, 28 September 11
ATLAS RESOURCES TO SELL 25% STAKE IN IPO - INSIDER STORIES
Insider Stories reported that, coal producer PT Atlas Resources Tbk, that is controlled by Indonesian businessman Andre Abdi, plans to sell 783.33 m ...
Tuesday, 27 September 11
A STRONG REBOUND FOR THE CAPE MARKET - BRS
A strong rebound for the Cape market, as cargoes continued to flow into the market and tonnage remained tight in the Atlantic, according to Barry Ro ...
Tuesday, 27 September 11
INTRACO SEALS US$25.3 MIO ORDER - INSIDER STORIES
Insider Stories reported that, Heavy equipment distributor PT Intraco Penta Tbk (INTA) obtained a US$25.3 million order on hand of heavy equipments ...
Sunday, 25 September 11
THE CHARTER RATES FOR INDONESIA TO INDIA WAS FIRM - VISTAAR
COALspot.com - The freight market moved up sharply with the cape Index up by 11 pct pushing the BDI by almost 6 pct and closing at 1,920 point ...
Saturday, 24 September 11
GOVT PLANS TO RENEGOTIATE ALL CONTRACTS INCLUDING FREEPORT - JP
The Jakarta Post reported that, the Energy and Mineral Resources Ministry has confirmed plans to renegotiate all mining contracts including those wi ...
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- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- PTC India Limited - India
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
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