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