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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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Sunday, 17 April 11
ADARO TO PROPOSE US$75 MILLION DIVIDEND
COALspot.com - One of Indonesia's largest coal miner PT Adaro Energy Tbk (ADRO) is keen to propose a final dividend of US$75 million or Rp 20.17 (U ...
Saturday, 16 April 11
TNPL RECEIVES 1.6MT OF COAL OFFERS - SOURCES
COALspot.com - Tamil Nadu Newsprint and Papers Ltd. has closed its 160,000 MT coal inquiry today.
More than a half a dozen of Indian coal t ...
Friday, 15 April 11
DRY BULK MARKET KEEPS ON FALLING, ON LOW DEMAND AND HIGH SUPPLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its falling patern this week, with the industry’s benchmark, the Baltic Dry Index (BDI) retreating again yesterda ...
Thursday, 14 April 11
SUPRAS IN N.CHINA GET CLOSE TO $12000 FOR TRIPS VIA INDONESIA TO INDIA - FEARNBULK
Handy
The Atlantic market remains flat - very little new/fresh business and slow activity. Considerable prompt tonnage remains unfixed. The USG pa ...
Wednesday, 13 April 11
CAPESIZE VESSELS ARE DELIVERED AT A PACE OF ONE NEW VESSEL EVERY SECOND DAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In a clear sign that it will take a significant rise in global seaborne dry bulk trade in order to be able to absorb the flurry of new building tonn ...
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- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- PTC India Limited - India
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- The University of Queensland
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
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