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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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Thursday, 29 July 10
BALTIC INDEXES ARE POSITIVE SINCE A FEW DAYS
Handy
Baltic indexes are positive since a few days which could mean that markets have bottomed out (as we correctly predicted in our report of las ...
Wednesday, 28 July 10
INDONESIA'S MERUKH SECURES US$200 MLN INVESTMENT FROM SAN MIGUEL
Trading Market Reported that, Indonesian mining company Merukh Enterprises said it has secured an investment commitment of US$200 million from the P ...
Wednesday, 28 July 10
RIZAL RISJAD MAY OWN 10% BERAU ENERGY
Rizal Risjad, son of Indonesian tycoon Ibrahim Risjad, might own 10% stakes in PT Berau Coal Energy Tbk (BRAU), parent company of Indonesia's fifth ...
Wednesday, 28 July 10
UNUSUAL RAINS TO HIT COAL EXPORTS
COALspot.com: Heavy rains in South and East Kalimantan have compelled coal exporters to delay or cancel coal exports. PT Bayan and PT. TIA hav ...
Tuesday, 27 July 10
INDIA HAS IMPORTED 1.5 MILLION TONS OF COAL LAST WEEK
COALspot.com: Coal imports in Indian ports have reached over 1.5 million tons for the week ended 25 July 2010. According to port agents, aroun ...
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- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- PTC India Limited - India
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- The University of Queensland
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Bhatia International Limited - India
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- London Commodity Brokers - England
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