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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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Monday, 20 June 11
5TH ASIA PACIFIC COAL TRADING & INVESTMENT OUTLOOK 2011 IS ON THE WAY
Press Release - Since the beginning of 2011, international commodity price has been in a high level, resulting in “TENSION” of energy co ...
Sunday, 19 June 11
S6 AND S7 ROUTES LIKELY TO BE SOFT NEXT WEEK - VISTAAR
COALspot.com - The freight market seemed to be stabilizing and the BDI and Cape index was up marginally and closed at 1,423 points and 1,824 points ...
Sunday, 19 June 11
BUMI 1Q NET PROFIT INCREASES 16.5 PERCENT
PT Bumi Resources Tbk (BUMI), Indonesia's largest coal exporter that is 25% owned by London-listed Vallar Plc, reported a16.49% increase in net pro ...
Friday, 17 June 11
DRY BULK BREATHES SIGH OF RELEAF ON RENEWED CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has caught a sign of relief from the middle of the week onwards, as the BDI (Baltic Dry Index) increased once again yesterday, t ...
Thursday, 16 June 11
BOOSTING THE USE OF LOW CARBON ENERGY FOR A BETTER WORLD
Bali, Indonesia host of world renewable energy congress – Indonesia, international conference & exhibition on renewable energy and energy ...
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- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
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- Chamber of Mines of South Africa
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- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
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- Goldman Sachs - Singapore
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- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
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- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
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- Ministry of Transport, Egypt
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- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
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- Asmin Koalindo Tuhup - Indonesia
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- Vedanta Resources Plc - India
- Parliament of New Zealand
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- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
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- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
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- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
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- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
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- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
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- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
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- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Economic Council, Georgia
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
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- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
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- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
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- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
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- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
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- Planning Commission, India
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
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- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
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