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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, 14 August 11
SUPRAMAX CHARTER RATES SHARPLY UP - CAPT.REDDY
COALspot.com - The BDI ended positive with gains in Cape and Panamax index. The BDI was up by 1.50 pct and the cape and panamax index was up by almo ...
Saturday, 13 August 11
GMR HAS ENTERED INTO CSPA WITH GEMS TO ACQUIRE 30% STAKE
COALspot.com - GMR Infrastructure Investments (Singapore) Pte Ltd, a subsidiary of GMR Infrastructure, has signed conditional sale and purchase agre ...
Friday, 12 August 11
COAL MINERS WILL ALLOW TO CONSTRUCT MINE MOUTH POWER PLANT
COALspot.com - The government is set to draft a regulation to enable construction of steam-fired power plants (PLTU) by coal mining companies for th ...
Friday, 12 August 11
CAPESIZE DEMAND HELPS LIFTING OF DRY BULK MARKET - HELLENIC SHIPPING NEWS
The dry bulk market has recovered a small fraction of its lost ground this week, with higher returns as a result of increased capesize demand. This ...
Thursday, 11 August 11
INDO TAMBANGRAYA 1H NET PROFIT SOARS 53.09%
Coal miner PT Indo Tambangraya Megah Tbk (ITMG) today reported a 53.09% jump in net profit for the first 6 months of this year on the back of higher ...
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- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
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