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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, 17 August 11
BUMI'S H1 UNDERLYING OPERATING PROFIT $62 MILLION
COALspot.com - Bumi PLC , posted underlying first-half operating profit of $62 million and production at PT Bumi Resources and PT Berau increased to ...
Wednesday, 17 August 11
SHIP OWNERS COULD FACE PAIN ON THE BACK OF GLOOMY ECONOMYS PREDICTIONS - HELLENIC SHIPPING
The latest market turmoil, coupled with the renewed risk of a global recession could very well signal more troubled times for ship owners of all shi ...
Tuesday, 16 August 11
CHALLENGER ENTERED INTO CSPA WITH PELANGI KERTANEGARA TO ACQUIRE 100% STAKE
COALspot.com - Challenger Deep Resources Corp., through its wholly owned subsidiary, P.T. Bestindo Energy, has exercised its option to purchase an a ...
Monday, 15 August 11
ADARO ENERGYS NET INCOME MORE THAN DOUBLES IN FIRST HALF 2011
COALspot.com - Indonesian’s second largest coal producer, Adaro Energy, booked net profit US$ 268 million in the first half 2011, rose two-fol ...
Monday, 15 August 11
INDIAS MALABAR CEMENTS SEEK TO IMPORT 40,000 TONS OF COAL
COALspot.com - Malabar Cements Ltd., India's Keralaa government owned cement factory is seeking to import 40K metric tons of non-coking coal throug ...
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- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- White Energy Company Limited
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Carbofer General Trading SA - India
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