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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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Tuesday, 29 March 11
DUTY EXEMPTION UNLIKELY TO IMPACT COKING COAL PRICES - PTI NEWS
Press Trust of India News reported that, the exemption to certain types of coking coal from customs duty is not likely to impact steel prices at pre ...
Monday, 28 March 11
HARUM ENERGY FY10 EARNING UP 7.23% - INSIDER STORIES
Thermal coal producer PT Harum Energy Tbk (HRUM), controlled by Indonesian businessman Kiki Barki through his son Lawrence Barki, posted a slight in ...
Monday, 28 March 11
IBT RAISES CAPACITY OF PULAU LAUT TERMINAL - THE JAKARTA POST
The Jakarta Post reported that, coal infrastructure and logistics firm PT Indonesia Bulk Terminal (IBT), a subsidiary of PT Adaro Energy Tbk, plans ...
Saturday, 26 March 11
THE FREIGHT MARKET REMAINED A BIT VOLATILE THIS WEEK - CAPT. REDDY
COALspot.com - "The freight market remained a bit volatile this week", says Capt. Reddy, director of Vistaar Shipping Singapore.
Howeve ...
Saturday, 26 March 11
FLSMIDTH WINS MULTIMILLION DOLLAR MATERIAL HANDLING PROJECT IN INDONESIA
FLSmidth has signed a contract in Jakarta worth in excess of USD 135m (DKK 700m) with PT Adaro Indonesia, a subsidiary of PT Adaro Energy Tbk., to s ...
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- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Bhatia International Limited - India
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