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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, 11 August 12
INDONESIAN COAL REFERENCE PRICE HAS LOST 27.78 PERCENT YOY
COALspot.com - Indonesian HBA fell again in August.
The monthly coal reference price for coal sales this month fell 3.32 percent. HBA fell ...
Saturday, 11 August 12
SUB-BIT INDONESIA COAL SWAPS SEEN MOVING IN THE RIGHT DIRECTION
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for September 2012 delivery gain 1.29 percent W-o-W on Friday (10 August 2012) closing but lost 1 ...
Friday, 10 August 12
DRY BULK MARKET DROWNING FROM TONNAGE OVERSUPPLY - HELLENIC SHIPPING
The dry bulk market has been overflowing with new building vessels, despite the fact that demand is more or less (and minus the seasonal factors) ri ...
Thursday, 09 August 12
3RD ANNUAL SHALE GAS
Press Release - With the North American shale gas boom, IBC’s 3rd Annual Shale Gas explores optimal strategies to monetize Asia’s domest ...
Wednesday, 08 August 12
EXPLOITASI AIMS TO RAISE RP 2.7T FOR ACQUISITION - THE JAKARTA POST
The Jakarta Post reported that, publicly listed coal miner PT Exploitasi Energi Indonesia (CNKO) is seeking to raise Rp 2.7 trillion (US$286.2 milli ...
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- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- White Energy Company Limited
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Deloitte Consulting - India
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
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