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