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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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Saturday, 30 April 11
THE PANAMAX WAS THE BIGGEST GAINER
COALspot.com - The freight market appeared to recover slightly after the Easter holidays. However they market may not move up much and likely to mai ...
Friday, 29 April 11
KOMIPO ISSUES TENDER FOR 710,000 MT OF LCV & HCV COAL
COALspot.com - Korea Midland Power Co. Ltd (KOMIPO) has issued a spot supply tender for supply of total 710,000 MT of thermal coal for delivery betw ...
Friday, 29 April 11
HARUM EYES IDR 2.58 TRILLION COAL TAKEOVER
PT Harum Energy Tbk (HRUM), that is controlled by Indonesian tycoon Kiki Barki, is poised to spend Rp 2.58 trillion (approximately US$ 301.296 mln) ...
Friday, 29 April 11
CHINA'S IMPORTS 27 PERCENT LESS COAL IN Q1 2011 - ICAP SHIPPING
ICAP Shipping reported that, China's coal imports in the first quarter were some 27% down on a year ago at 32.3 Mt (2010: 44.4 Mt). Part of the rea ...
Thursday, 28 April 11
BALTIC DRY INDEX NUDGES UP AFTER DAYS OF LOSSES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After consecutive falls, the dry bulk freight market, as followed through the Baltic Dry Index, finally caught a breather yesterday, with the BDI ma ...
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- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
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- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Central Electricity Authority - India
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
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