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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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Friday, 23 July 10
THE PANAMAX MARKET HAS CONTINUED ITS SLOW CLIMB - FEARNLEYS
Handy
Continued flat Atlantic markets and over-supply of tonnage across all segments on spot basis. Nevertheless there is more fresh enquiry on Co ...
Friday, 23 July 10
KPMG INDIA FACES COAL DEFICIT OF 50% OF EXPECTED POWER PLANT DEMAND, SAYS - BLOOMBERG
Bloomberg reported that, India may face a coal shortfall of 189 million metric tons a year by 2015, about 50 percent of the power sector’s exp ...
Thursday, 22 July 10
BERAUS IPO NEXT MONTH CAN BECOME THE LARGEST THIS YEAR - THE JAKARTA POST
The Jakarta Post reported that, Indonesia’s fifth largest coal miner PT Berau Coal Energy Tbk will launch its initial public offering (IPO) ne ...
Thursday, 22 July 10
DRY BULK MARKET EDGES HIGHER, BUT RECOVERY IS SLOW
The dry bulk market’s recovery, which started last Friday has sustained its momentum thus far, but the pace of it seems to be an agonizing one ...
Wednesday, 21 July 10
CHARTER RATES FOR BIG SHIPS GO INTO FREEFALL
It is reported that concerns over the slowdown in the mainland construction sector posturing over ore price negotiations and a general summer slowdo ...
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- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- PTC India Limited - India
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
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