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