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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, 28 July 12
CAL 2013 COAL SWAPS ARE HIGHER COMPARED TO SEPT 2012 PRICES
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for September 2012 delivery gain 0.47 percent on Friday (27 July 2012) closing DoD but lost 0.90 ...
Friday, 27 July 12
PACIFIC MARKET REMAINED FLAT - FEARNLEYS AS
Handy
The Atlantic market continued its downward trend from last week with what appears to be a summer lull across the board. A trip from the USG t ...
Wednesday, 25 July 12
BUKIT ASAMS H1 REVENUE JUMPED BY 13 PERCENT
COALspot.com - PT Bukit Asam (Persero), Tbk., the state owned coal miner's revenue in H1 2012, has jumped 13 percent to IDR 5.79 trillion (approxim ...
Wednesday, 25 July 12
BUMI RESOURCES MINERALS SECURED PINJAM PAKAI FOR ITS ZINC AND LEAD PROJECT
COALspot.com - PT Bumi Resources Minerals Tbk. ("BRMS" or "the Company") today reported that its 80% owned subsidiary, PT Dairi ...
Tuesday, 24 July 12
SHIP OWNERS WAITING FOR SHIP PRICES TO FALL FURTHER BEFORE MOVING IN MORE AGGRESSIVELY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the summer season already well under way and many ship owners getting ready for the autumn, the sale & purchasing activity of second hand v ...
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- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- London Commodity Brokers - England
- PTC India Limited - India
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
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