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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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Thursday, 16 June 11
FREIGHT MARKET FAILS TO RECOVER - DREWRY / HELLENIC SHIPPING
With demand failing to improve enough to contain the colossal increases in supply, the dry bulk freight market stayed near the dreadfully low levels ...
Thursday, 16 June 11
VALLAR CONTROLS 84.7 PERCENT STAKE IN BERAU COAL - INSIDER STORIES
Insider Stories reported that, London-based investment company Vallar Plc, via its subsidiary dubbed Vallar Investments UK Limited, today announced ...
Wednesday, 15 June 11
INDONESIA NEW COAL POLICY WORRIES INDIA POWER FIRMS - MYDIGITALFC
Tata Power, Adani group, Lanco Infratech and Reliance Power, among other Indian coal importers, are waiting to assess the impact of the Indonesian g ...
Wednesday, 15 June 11
BAYAN RESOURCES OWNS 56 PERCENT KANGAROO - INSIDER STORIES
Australia-listed coal miner Kangaroo Resources Limited (KRL) has obtained final approval from its shareholders to complete its US$277 million acquis ...
Wednesday, 15 June 11
DRY BULK MARKET WEAKENS AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Despite this time of year traditionally being one of the busiest for the dry bulk market, it seems that in the post-crisis era trade patterns are co ...
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- MS Steel International - UAE
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- White Energy Company Limited
- McConnell Dowell - Australia
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
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