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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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Friday, 05 August 11
THE WORLDS LARGEST COAL MINER TO INVEST IN INDO MINES
COALspot.com - Golden Energy Mines (GEMS) might go for initial public offering (IPO) by the end of September 2011. The company is planning to off lo ...
Friday, 05 August 11
DRY BULK MARKET FINALLY TAKES A BREATHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market at last caught a break mid-week after a constant fall which saw the industry’s benchmark, the BDI (Baltic Dry Index) falli ...
Thursday, 04 August 11
THE HBA CONTINUES TO FALL IN AUGUST
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has set the August 2011 coal reference price at US$ 117.21 per ton slightly low ...
Wednesday, 03 August 11
DEWA RETURNS TO US$2.65 MIO NET PROFIT - INSIDER STORIES
Coal mining contractor PT Darma Henwa Tbk (DEWA), that most of its revenue is contributed by Kaltim Prima Coal and Arutmin Indonesia, returned to ne ...
Wednesday, 03 August 11
DRY BULK MARKET SINKS TO THREE-MONTH LOWS, BUT CAPESIZES COULD TURN THINGS AROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on falling this week, on the back of slow cargo demand amid the summer season. Yesterday, the BDI (Baltic Dry Index), the i ...
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- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Minerals Council of Australia
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- White Energy Company Limited
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- The University of Queensland
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
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