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