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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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Friday, 22 June 12
GLOBAL ACTION NEEDED ON ENERGY POVERTY - WORLD COAL
Eradicating energy poverty is possibly the biggest challenge facing the world today. Like climate change it can only be addressed with a concerted g ...
Friday, 22 June 12
COAL: THE BACKBONE OF MODERN ELECTRICITY - ECOAL
Coal has been described as the "forgotten fuel," perhaps because many aren't aware of the huge role it plays in powering the global econo ...
Thursday, 21 June 12
DRY BULK MARKET ON THE RISE AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was on the rise once again yesterday, with the Baltic Dry Index (BDI), the industry’s benchmark, rising by 18 points, or 1 ...
Wednesday, 20 June 12
BDI MOVING HIGHER, PANAMAX AND SUPRAMAX VESSELS STRONGER, CAPESIZE RATES NEAR TO HISTORICAL LOWS OF DECEMBER 2008 - MARIA BERTZELETOU, HELLENIC SHIPPING
The dry market seems to follow the dynamic of the previous week with the Baltic Dry Index showing daily increases since June 8th, but is still stand ...
Tuesday, 19 June 12
SMALLER DRY BULK CARRIERS LIFT UP MARKET, PANAMAXES SET TO FALL SAYS ANALYST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Another rise for the dry bulk market was evident yesterday, as the industry’s benchmark, the BDI (Baltic Dry Index) was up for a ninth straigh ...
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- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- PTC India Limited - India
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
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