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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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Friday, 01 April 11
DRY BULK MARKET WEAKENS ON SLOWER DEMAND, HOPES FOR MID-TERM REBOUND ON JAPANS RECONSTRUCTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market, as reflected in the Baltic Dry Index (BDI) retreated for a third day yesterday, after staying flat on Monday, to end at 1,530 p ...
Wednesday, 30 March 11
CHALLENGER SIGNS OPTION AGREEMENTS TO PURCHASE FOUR COAL PROJECTS IN INDONESIA
Challenger Signs Three Exclusive Option Agreements to Purchase Four Coal Projects in East Kalimantan, Indonesia
Challenger Deep Resources Corp.ha ...
Wednesday, 30 March 11
KPCL TO IMPORT ONE MILLION TONS OF 6300 GAD COAL
COALspot.com - Karnataka Power Corporation a state utility of Karnataka, India called for open tender for supply of one million tons of 6300 Kcal/kg ...
Wednesday, 30 March 11
WIKA GRABS PROJECT FROM ADARO INDONESIA - INSIDER STORIES
One of Indonesia's largest thermal coal PT Adaro Indonesia has finally mandated PT Wijaya Karya Tbk (WIKA) as a contractor to install and manage ov ...
Tuesday, 29 March 11
JAPAN FACTOR RIPPLING THROUGH THE SHIPPING MARKETS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the world watching the latest developments regarding the nuclear crisis in Japan and the devastating effects of the recent tragedy that struck ...
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- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
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