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