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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, 05 July 12
BUMI ACHIEVES HIGHER SELLING PRICE IN FIRST QUARTER
COALspot.com - PT Bumi Resources Tbk (BUMI), Indonesia's largest coal producer and exporter, has successfully maintained a higher sales margin, des ...
Tuesday, 03 July 12
DRY BULK MARKET INCHED FORWARD AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched forward at the beginning of the new week, prior to the US holidays regarding the celebration of the 4th of July, which is ...
Monday, 02 July 12
ORPHEUS STRENGTHENS REVENUE STREAM WITH NEW ROYALTY AGREEMENT AT THE B2 COAL PROJECT
Orpheus Energy (ASX:OEG) is pleased to advise that it has executed a life of mine Royalty Agreement with Indonesian mining contractor PT Debbia Mini ...
Monday, 02 July 12
DRY BULK DEMAND TO RISE TO 3.6 BILLION TONNES IN 2012, BUT NEW BUILDING DELIVERIES ARE
In its latest analysis on the dry bulk market fundamentals, DVB Bank said that dry bulk cargo demand is forecast to rise to approximately 3.6 billio ...
Sunday, 01 July 12
AUSTRALIAS CARBON TAX - SUNIL K KUMBHAT
COALspot.com - Climate Change
Climate change and global warming have now become buzzwords the world over. The disastrous consequences for global ...
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- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Planning Commission, India
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- VISA Power Limited - India
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
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