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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, 13 December 10
NALCO TO START WORK ON RS 18K CR ($ 4,010,695,091) INDONESIAN PROJECT BY JUNE - MSN
MSN reported that, State-owned NALCO today said it has selected UAE-based RAK Minerals as JV partner for its Rs 18,000 crore (US$ 4,010,695,091 ...
Monday, 13 December 10
DEUTSCHE BANK RAISES COAL FORECASTS ON MARKET SHORTAGE - BLOOMBERG
Deutsche Bank AG raised price forecasts for thermal coal by as much as 17 percent on expectations that a shortage of the fuel will widen over the ne ...
Monday, 13 December 10
K SERA SERA TO SPEND RS325CR TO BUY COAL,OIL & GAS FIRMS STAKE - LIVE MINT
The company might have to dole out around Rs 225 crore (US$ 50,122,522) for picking up the majority stake in the coal mine in Indonesia and around R ...
Thursday, 09 December 10
OVERSUPPLY OF SHIPS BOUND TO KEEP DRY BULK FREIGHT RATES SUBDUED DURING 2011 SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
An oversupply of vessels is expected to keep freight rates from flying as high as in recent years said a relative shipping report from BIMCO’s ...
Thursday, 09 December 10
INDONESIAN COAL PRICE REFERENCE REACHED US$ 103.41 PMT FOR DECEMBER DELIVERY
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
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- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
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