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