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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, 14 September 11
GOVT SETS SEPTEMBER COAL REFERENCE PRICE AT $116.26 PER TON
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has set the September 2011 coal reference price at US$ 116.26 per ton slightly ...
Tuesday, 13 September 11
CAPITAL COSTS OF INDIAN COAL MINING PROJECT - AN ANALYST VIEW
By Mr Dipesh Dipu, Director - Consulting (Mining), Deloitte Touche Tohmatsu India Private Limited
The coal mining sector that has been opened par ...
Tuesday, 13 September 11
INDONESIAS COAL SECTOR EYES 2012 BOOM - JG
The Jakarta Globe, Indonesian English language News paper reported that, Coal production is set to surge next year as coal miners bolster their busi ...
Tuesday, 13 September 11
DRY BULK RALLY MAINTAINS MOMENTUM AT START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept its upward momentum at the start of the week, as the industry’s benchmark, the Baltic Dry Index (BDI) was up by 2.07% ...
Monday, 12 September 11
INDONESIAN GOVERNMENT HAS ALLOCATED MORE COAL FOR 2012
COALspot.com - Indonesian government has increased the domestic market obligation allocation to 82.07 million tons of coal for 2012, which is 4 perc ...
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- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- MS Steel International - UAE
- Eastern Energy - Thailand
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Australian Coal Association
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
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