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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, 22 January 11
POSSIBLE COAL EXPORT RESTRICTIONS ON INDONESIA UNLIKELY TO AFFECT CHURCHILL MINING - PROACTIVE INVESTORS
Proactive Investors reported that, Churchill Mining moved to reassure investors after a fall in its share price, stating that from talks with the au ...
Thursday, 20 January 11
INDONESIA MAY BAN LOW-QUALITY COAL EXPORTS FROM 2014 - BLOOMBERG
Bloomberg reported that, The Indonesian government plans to ban exports of coal with an energy value of less than 5,600 kilocalories a kilogram star ...
Thursday, 20 January 11
SUPRAS ARE DOING USD 7- 8K FOR INDONESIA-INDIA - FEARNBULK
Handy
Negative sentiment for forward positions in the Atlantic market due to lack of cargo availability and too many ballasters from the East. Con ...
Thursday, 20 January 11
ITMG TARGETS TO PRODUCE 25 MILLION TONS OF COAL THIS YEAR - BISNIS INDONESIA
Bisnis Indonesia reported that, Coal producer PT Indo Tambangraya Megah Tbk (ITMG) targets to produce 25 million tons of coal this year, a 13. ...
Thursday, 20 January 11
DRY BULK MARKETS FALL SEES NO END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Pundits indicating that the dry bulk market’s sentiment remains weak were justified, as the industry’s benchmark, the Baltic Dry Index ( ...
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- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Australian Coal Association
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- White Energy Company Limited
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
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