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