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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, 26 March 11
ADARO AIMS TO DOUBLE COAL PRODUCTION -THE JAKARTA POST
The Jakarta Post reported that, coal producer PT Adaro Indonesia is planning to soon boost its production capacity to 80 million tons annually, almo ...
Friday, 25 March 11
KNOWLEDGE INFRASTRUCTURE TO BAG 160,000 MT COAL SUPPLY ORDER FROM TNPL
COALspot.com - Delhi based Knowledge infrastructure Systems Pvt. Ltd offered lowest price of US$ 97.10 per metric ton for calorific value of 6000 GA ...
Friday, 25 March 11
THE CAPESIZE MARKET CONTINUED TO FALL - FEARNBULK
Handy
The Atlantic market remains stable with more activity from the Black Sea to Feast paying in the mid 20´s on supras.
The USG remain ...
Friday, 25 March 11
BORNEO ENERGI FY10 NET INCOME SOARS - INSIDER STORIES
Coking coal producer PT Borneo Lumbung Energi Tbk (BORN) booked a skyrocket net income by 499.72% from net loss position in 2009, as quoted by Insid ...
Thursday, 24 March 11
INDIA'S CHETTINAD INTERNATIONAL COAL TERMINAL'S PERMISSIBLE DRAFT HAS INCREASED TO 13.5 M
COALspot.com - Chettinad International Coal Terminal in Ennore port has the berth with draft 13.5 Meters now, according to E-Mail statement received ...
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- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Planning Commission, India
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- The University of Queensland
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
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