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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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Sunday, 05 April 15
FREIGHT RATES UNDER PRESSURE WEEK OVER WEEK
COALspot.com: The Indices fell on all segments and the market seemed to soften this week.
The BDI was almost lost 1.34% week over week and clo ...
Saturday, 04 April 15
BORYEONG POWER OF KOMIPO TO BUY TOTALED 695K MT OF HIGH AND LCV COAL
COALspot.com - Korea Midland Power Co. Ltd. (KOMIPO) is inviting bids from coal producers, marketing companies, or traders to supply of 500000 Metr ...
Friday, 03 April 15
U.S WEEKLY COAL PRODUCTION STAYS FLAT
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 18.3 million short ...
Friday, 03 April 15
TOBA BARA'S PANDU SJAHRIR ELECTED AS NEW CHAIRMAN OF THE INDONESIAN COAL MINING ASSOCIATION
COALspot.com: Pandu Sjahrir, the Vice President Director & CFO of the Jakarta-listed PT Toba Bara Sejahtra — a subsidiary of PT Toba Seja ...
Thursday, 02 April 15
GOVERNMENT MUST WORK WITH MINING, NOT AGAINST IT - PANDU SJAHRIR
The Coal Face: The coal price has hit its lowest point in recent memory
My father used to say to me that his children are his biggest inv ...
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- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- PTC India Limited - India
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- The University of Queensland
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
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