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