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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, 29 June 11
ANOTHER STRONG PERFORMANCE BY CAPESIZE - BRS
Another strong performance by the Capesize market this week, bringing the BCI up 8% to 1,974 points. However the Panamax market was penalised, losin ...
Monday, 27 June 11
THE IRON ORE IMPORTS BY CHINA SEEMED TO SLOW DOWN - VISTAAR
COALspot.com - The BDI was holding as previous week and was just up by 1 point and closed at 1424 points end of last week. The biggest gain was ...
Friday, 24 June 11
THE INDONESIAN GOVERNMENT WILL NOT EXTEND ALL EXPIRED MINING CONTRACTS - JAKARTA UPDATES
The Indonesian Government have decided not to extend all mining concessions under the scheme called Contract of Work and instead will take over the ...
Friday, 24 June 11
BERAU EYEING 70 PERCENT GROWTH IN EBITDA
Indonesia's coal producer PT Berau Coal Energy Tbk (BRAU) is eyeing a 60 -70 percent growth in EBITDA to US$ 560 million-US$595 million this year. ...
Thursday, 23 June 11
DRY BULK MARKET KEEPS EXHIBITING SIGNS OF WEAKNESS THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market seems to be unable to climb at new highs this week, showing signs of weakness, across most ship types. Yesterday, the Baltic Dry ...
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- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Marubeni Corporation - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
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