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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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Sunday, 28 August 11
FREIGHT MARKET COULD BE FIRM NEXT MONTH - VISTAAR
COALspot.com - The freight market continued the upward trend first half of the week . However, towards the end of the week lost momentum and the BDI ...
Saturday, 27 August 11
JAPANESE BULK CARRIER SETS RECORD ON NORTHERN SEA ROUTE - BARENTS OBSERVER
The Northern Sea Route will see its third record in less than a month when the largest ever bulk carrier to take the route leaves Murmansk next week ...
Saturday, 27 August 11
RBCT-INDIA ROUNDS FIXED AT AROUND US$ 12K - FEARNBULK
Handy
Stable but very positional markets across all segments in the Atlantic: the gap between owners and charterers rate ideas is building up as o ...
Friday, 26 August 11
TUAH TURANGGA AGUNG ACQUIRES AN ADDITIONAL 40% SHARES IN BARA PRIMA AGUNG
COALspot.com - PT Tuah Turangga Agung, a subsidiary of PT United Tractors Tbk, has signed an acquisition agreement to acquire 40% of PT Bara Prima A ...
Friday, 26 August 11
INTRACO EYES US$200 MIO COAL TAKEOVER - INSIDER STORIES
Heavy equipment distributor PT Intraco Penta Tbk, that was founded by Halex Halim, is scouting a coal acquisition with the valuation above US$200 mi ...
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- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- The University of Queensland
- Aditya Birla Group - India
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
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