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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, 01 June 12
COKAL ACCEPTED ON THE CLEAN AND CLEAR LIST FOR ITS BORNEO BARA PRIMA AND BUMI BARITO MINERAL PROJECTS
- Borneo Bara Prima (BBP) Project confirmed on the Clean and Clear List 9th May 2012
- Bumi Barito Mineral (BBM) Project confirmed on the Clean and ...
Friday, 01 June 12
ADARO BUYS MAJORITY STAKE IN AFFILIATED BHAKTI ENERGI - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk entered into an option to provide a convertible loan of up to US$500 million for a period of 3 ye ...
Thursday, 31 May 12
DRY BULK MARKET UNABLE TO FIND NEW SUPPORT TO REACH HIGHER LEVELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been unable to find new support and recover to higher levels during these past few days. As a result, the Baltic Dry Index ( ...
Wednesday, 30 May 12
ORPHEUS RAISES $2.24M TO ADVANCE INDONESIAN COAL PRODUCTION ASSETS
• $2.24 million raised from a placement to new and existing institutional and sophisticated investors from Australia and overseas
• Funds ...
Wednesday, 30 May 12
ARPENI SECURES TRANSSHIPMENT CONTRACT FROM BARUNA DIRGA
Insider Stories reported that, shipping operator PT Arpeni Pratama Ocean Line Tbk (APOL) has secured a 1-year coal transhipment contract of 4 millio ...
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- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- The University of Queensland
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Planning Commission, India
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Australian Coal Association
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Economic Council, Georgia
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
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