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