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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, 08 March 11
US$ 8 BILLION WORTH OF INFRASTRUCTURE PROJECTS IN PIPELINE IN INDONESIA - WOOD MACKENZIE
India’s Increasing Demand for Thermal Coal Cannot Be Satisfied Without Emerging Coal Areas in Indonesia - Wood Mackenzie
At Coa ...
Tuesday, 08 March 11
INDIA'S VEDANTA TO ACQUIRE COAL MINES IN OVERSEAS
COALspot.com - India's Vedanta group is also looking at long-term off take agreements and possible acquire of coal mines overseas, the official sai ...
Tuesday, 08 March 11
MINERS SAY VALUE-ADDED LAW WILL HURT IN THE LONG RUN - THE JAKARTA GLOBE
The Jakarta Globe reported that, Government plans to require miners to give added value to their exported commodities could end up costing the count ...
Tuesday, 08 March 11
THE PANAMAX MARKET THIS WEEK FIRMED UP - BRS
Underlining the unpredictability of the current market, rates for all dry bulk segments swung up again last week. Stronger exports out of South Amer ...
Sunday, 06 March 11
THE S6 ROUTE MAY CONTINUE TO BE FIRM - VISTAAR
COALspot.com - The freight market was firm this week with all indices up. The BDI , Cape Index and Panamax index was up by almost 9 pct where as Sup ...
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- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Planning Commission, India
- VISA Power Limited - India
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
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