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