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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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- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- The University of Queensland
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Planning Commission, India
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Australian Coal Association
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
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