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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, 05 May 11
AKR NAMES KARUNIA AS COAL CONTRACTOR
Insider Stories reported that, PT AKR Corporindo Tbk has appointed PT Karunia Bumi Khatulistiwa as the contractor of coal mining concession in North ...
Tuesday, 03 May 11
DRY BULK MARKET OUTLOOK SEEN WEAK, AS SHIP OWNERS PILE UP MORE SHIPS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the Baltic Dry Index not trading yesterday, it’s worth taking a step back to see the current freight levels. First of all, capesizes and ...
Tuesday, 03 May 11
THE HANDY MARKET CONTINUED TO SLIDE DOWN - BRS
There were marginal increases in rates for the larger sizes this week, with the Cape index remaining stable and the Panamax index logging a 5% incre ...
Monday, 02 May 11
ADARO POSTS 11.7 PERCENT INCREASE IN REVENUES ON HIGHER PRICES - THE JAKARTA POST
The Jakarta Post reported that, Indonesia’s second-largest coal producer, PT Adaro Energy Tbk, announced an 11.7 percent increase in net reven ...
Saturday, 30 April 11
BUKIT ASAM PROFIT HAS JUMPS 108 PERCENT IN Q1, 2011
The Indonesian state-controlled coal miner PT Bukit Asam Tbk (PTBA) reported a 108.07 percent jump in net profit during the first three months of 20 ...
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- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- ASAPP Information Group - India
- White Energy Company Limited
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Planning Commission, India
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Australian Coal Association
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- PTC India Limited - India
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
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