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