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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, 04 July 14
US: WEEKLY COAL PRODUCTION SLIGHTLY UP W-O-W
COALspot.com – United States the world's second largest coal producer, produced approximately 19.4 million short tons (mmst) of coa ...
Friday, 04 July 14
PARAM MITRA COAL RESOURCES SECURES US$ 7.5M INVESTMENT FROM TEMBUSU PARTNERS
Param Mitra Coal Resources Pte Ltd (“PMCR”), which owns two operating coal mines in Indonesia, has secured from Singapore private equit ...
Thursday, 03 July 14
BUMI TRANSFERS 19% OF KPC STAKE VALUED AT US$ 950 MILLION TO CIC
COALspot.com: PT. Bumi Resources announces that 19% of its holdings in Kaltim Prima Coal (KPC), valued at US$ 950 million, has been transferred to ...
Thursday, 03 July 14
PANAMAX : IN THE ATLANTIC, OWNERS ARE WILLING TO FIX AT ABOUT $2.5K PER DAY - FEARNEYS
Handy
In its latest weekly report, shipbroker Fearneys noted that, this week seems to have been more of a wait and see game between owners and ch ...
Wednesday, 02 July 14
NEWMONT FILES FOR INTERNATIONAL ARBITRATION ON ORE EXPORT BAN - THE JAKARTA POST
PT Newmont Nusa Tenggara (NNT), a subsidiary of United States-based Newmont Corporation, has filed for international arbitration against the govern ...
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- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- The University of Queensland
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- VISA Power Limited - India
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