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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, 26 February 10
BANPU PROFITS SURGE BY 54% TO RECORD B14BN ON BRISK SALES
Banpu Plc, Asean's largest coal miner, said its earnings surged to a record high of 14.23 billion baht last year, an increase of 54% on the previou ...
Thursday, 25 February 10
INDO / INDIA COAL TRIPS SUPRAS CAN ACHIEVE AROUND MID 10S - FEARNLEYS AS
Handy
The BSI regained positive momentum exactly a week ago and the Atlantic rema ...
Thursday, 25 February 10
STEEP RISE IN COAL IMPORTS REQUIRED TO POWER INDIA - MONEYLIFE
The power ministry has estimated coal imports of 48 million tonnes in FY10-11, sharply higher than the expected imports of 28mt in the current fisca ...
Wednesday, 24 February 10
CHINA IMPORTED 8.81 MLN TONS OF INDONESIAN COAL IN JANUARY 2010
COALspot.com: Indonesia, the world largest coal exporter, exported 24.38 million tons of coal last month, compared with 27.46 million tons in a ...
Tuesday, 23 February 10
TRENDS..... DRY BULK MARKET .... TRENDS
The dry bulk market was pulled along by the Capes this week, as fresh enquiry breathed temporary life back into the market. Short period rates also ...
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- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- The University of Queensland
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
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