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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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- Bhatia International Limited - India
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Bharathi Cement Corporation - India
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
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