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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, 03 July 11
INDONESIAN GOVERNMENT HAS CLEARED 1509 COAL IUP'S AS CLEAR AND CLEAN
COALspot.com - The Directorate general of mineral & coal of Indonesia has cleared around 1,509 IUP holders (coal mining companies) as "clea ...
Sunday, 03 July 11
MONSOON IN INDIA PUSHED FREIGHTS UP FROM INDONESIA TO WC INDIA - VISTAAR
COALspot.com - The BDI continued to hold closing just 2 points below last week at 1,422 points which was supported by Cape index which was up by 71 ...
Friday, 01 July 11
BEN LINE OPENS A NEW OFFICE IN BERAU
COALspot.com - Ben Line Agencies has announced that it has opened a new office in the busy coal loading port of Berau in East Kalimantan increasing ...
Friday, 01 July 11
CAPESIZE RATES TO REMAIN DEPRESSED IN COMING MONTHS SAYS SHIPPING ORGANIZATION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In a recent report, BIMCO reassessed that Capesize freight rates will remain in depressed territory in the coming months. Capesize Time Charter Aver ...
Thursday, 30 June 11
DRY BULK MARKET SHOWS SIGNS OF FURTHER WEAKENING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market seems to be unable to shake off the additional supply of vessels, an oversupply issue of grave concern that would have occured e ...
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- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- ASAPP Information Group - India
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- The University of Queensland
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
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