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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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Wednesday, 06 June 12
INDONESIAN GOVERNMENT'S DECLARED COAL PRICES CONTINUING ITS DECLINE
COALspot.com - Indonesian HBA fell to lowest level since January 2011 in June 2012. The monthly coal reference price for coal sales this month ...
Monday, 04 June 12
MITRABAHTERA SUBSIDIARY SECURES CONTRACT FROM BERAU COAL - INSIDER STORIES
Insider Stories reported that, PT Mitra Alam Segara Sejati, a subsidiary that is 60% owned by PT Mitrabahtera Segara Sejati Tbk (MBSS), has secur ...
Sunday, 03 June 12
TTI ESTABLISHES COAL TRADING & MARKETING OFFICE
COALspot.com - TTI has officially established its coal trading, marketing-office in Jakarta, Indonesia. PT. Gunung Tinggi Coal is the TTI’s fi ...
Sunday, 03 June 12
FREIGHT MARKET CONTINUING ITS DECLINE
COALspot.com - The BDI continued to fall for the fifth straight week and the BDI fell by 2.57 pct this week closing at 904 points.
The Cape Size ...
Friday, 01 June 12
TNPL HAS SECURED 300K MT OF 6000 GAD COAL AT US$ 81 CNF TUTICORIN
COALspot.com - An India based coal trader Adani has offered the lowest price of US$ 81.00 per metric ton for calorific value of 6000 GAD and 15 perc ...
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- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
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- India Bulls Power Limited - India
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- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
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- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
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- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
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- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
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- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
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- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
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- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Planning Commission, India
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- Minerals Council of Australia
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- Madhucon Powers Ltd - India
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- MS Steel International - UAE
- Mjunction Services Limited - India
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- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
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- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Malabar Cements Ltd - India
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- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
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- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- PTC India Limited - India
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Parliament of New Zealand
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- The University of Queensland
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
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