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