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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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Saturday, 25 August 12
FREIGHT RATES ARE EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - This week the indices showed some signs of improvement will all the segments moving up except for the handy size.
The BDI was marg ...
Saturday, 25 August 12
INDONESIAN COAL SWAP REMAINS STABLE AT LOW LEVEL
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for October 2012 delivery gain 0.804 percent W-o-W on Friday (24 August 2012) closing but lost 0. ...
Thursday, 23 August 12
INDONESIA-INDIA, LARGE ECO SUPRA FIXED AT USD 6K FOR DELIVERY SOUTH CHINA - FEARNLEYS AS
Handy
The market continued the same trend as last week, low activity and holidays in some countries.
Rate wise unchanged, with US Gulf/Continent ...
Thursday, 23 August 12
EGCO GROUP EXPANDS TOWARDS INTEGRATED ENERGY BUSINESS WITH INVESTMENT IN INDONESIAS COAL MINE
Electricity Generating Public Company Limited or EGCO Group, the Thailand’s first Independent Power Producer has continually invaded foreign m ...
Thursday, 23 August 12
EGCO GROUP ANNOUNCES 2 BILLION BAHT PROFITS IN Q2/2012
Successfully Establishes Integrated Energy Business and Strengthen Investments in ASEAN
Mr. Sahust Pratuknukul, President of Electri ...
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- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
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