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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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Wednesday, 06 January 10
BUMI SHARES UP AS OVERALL PERFORMANCE BEATS PREDICTIONS
The world’s largest thermal coal exporter PT Bumi Resources saw its shares jump 10 percent to Rp 2,675 ($29 US cents) on Tuesday after the com ...
Wednesday, 06 January 10
INDIA MAY HAVE BECOME TOP BUYER OF SOUTH AFRICAN COAL
India may have overtaken Europe for the first time as the biggest purchaser of South African coal in 2009, according to Raymond Chirwa, Richards Bay ...
Wednesday, 06 January 10
COAL PEAK RECEDES INTO THE FAR DISTANCE
COALspot.com (German): Coal will be available to mankind as an energy source for the next 120 years.
The German Coal Importer Association has ca ...
Tuesday, 05 January 10
SUPRAMAX MARKET REMAINED QUIET OVER THE LAST 10 DAYS BRS - DRY BULK
Despite a damp end to the year for bulk rates, shipping has weathered the storm far better than was initially expected in the wake of the financ ...
Tuesday, 05 January 10
WINTER WEATHER SPIKES COAL PRICES - CHINA UPDATE
Cold weather is driving coal prices higher and will lend the advantage in annual negotiations to suppliers, analysts said, predicting that the risin ...
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- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Australian Coal Association
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Economic Council, Georgia
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
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