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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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Thursday, 26 June 14
COAL DIVESTMENT CAMPAIGNS COME WITH RISKY UNINTENDED CONSEQUENCES - WCA
Last week I presented to the Expert Group on investments in coal and petroleum companies, the body set up to advise the Norwegian Government on whe ...
Wednesday, 25 June 14
INDONESIAN COAL EXPORTS ON RISE; EARNINGS FALL ON LOWER SELLING PRICES
COALspot.com: Indonesia, one of the world's largest coal producer and the global largest multi grade coal exporter shipped around $1.84* ...
Wednesday, 25 June 14
THE PANAMAX MARKET REACHED FRESH LOWS FOR THE YEAR, SAYS INTERMODAL
COALspot.com: The Dry Bulk market closed off the week noting a slight decrease, but this image of stability is merely representative of freight rat ...
Wednesday, 25 June 14
SHIPPING: MARKET INSIGHT - YANNIS OLZIERSKY
During his recent visit in London, China's Premier, Li Keqiang, announced that China's economy, the world's second largest after the US ...
Tuesday, 24 June 14
INDONESIAN COAL MINER TARGETS RP 313 BILLION IPO
COALspot.com: Indonesian coal miner PT Mitrabara Adiperdana is aiming to raise up to Rp 313 billion to Rp 368 billion (approximately $26.133 millio ...
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- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
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- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
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- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
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- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Minerals Council of Australia
- Planning Commission, India
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Australian Coal Association
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
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