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