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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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Monday, 28 February 11
COAL INDIA HIKES PRICES BY 12% FOR SELECT CONSUMERS - ECONOMIC TIMES
Economic Times reported that, Coal India has raised prices by an average 12% for some of its consumers from Sunday, boosting its revenue by 6,000 cr ...
Saturday, 26 February 11
CIL TO HIKE COAL PRICES BY 15 PC FROM TONIGHT - THE TIMES OF INDIA
The Times of India reported that, an Indian State-run coal producer, Coal India will raise the price of coal on an average by about 15 per cent with ...
Saturday, 26 February 11
SUPRAMAX INDEX WAS UP ABOUT 10 PERCENT THIS WEEK - VISTAAR
COALspot.com - The market started on a weak note and seemed to have lost the momentum seen the previous week. The main sectors affected were Cape an ...
Saturday, 26 February 11
PEABODY ENERGY ENTERS INTO COAL SOURCING AGREEMENT ACCESSING INDONESIAN COAL FOR EXPORT
Peabody Energy today said it has entered into an agreement with Indonesia's PT Cahaya Energi Mandiri (CEM) to source 2 million tons of coal for Asi ...
Thursday, 24 February 11
DRY BULK MARKET KEEPS LOSING GROUND, CAPESIZES SUFFERING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market lost further ground yesterday, as the industry’s benchmark, the Baltic Dry Index was rapidly falling, ending the session d ...
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- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- The Treasury - Australian Government
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
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