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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, 26 April 12
BUKIT ASAMS 1Q OPERATING PROFIT MARGIN HAS INCREASED BY 6% TO RP. 1 TRILLION
COALspot.com - PT. Bukit Asam (Persero), the Indonesia’s state owned coal miner's 1Q, 2012 revenue has increased by 31% to Rp. 3.02 trillion ...
Thursday, 26 April 12
TAIPOWER TO BUY 1.15 MILLION TONS OF 5000 GAR COAL
COALspot.com - Taiwan Power Company intends to procure 1.125million tons of sub-bituminous coal for Taipower thermal power plant through open tender ...
Thursday, 26 April 12
TAIPOWER TO BUY 375,000 MT OF 4800 GAR COAL
COALspot.com - Taiwan Power Company intends to procure 375,000 metric tons of low sulfur sub-bituminous coal for Taipower thermal power plant ...
Thursday, 26 April 12
ADK SHIPPED 28,000 TONNES OF COAL THIS MONTH
COALspot.com - Orpheus Energy (ASX:OEG) has announced that four coal barges carrying a total of approximately 28,000 tonnes of ADK (Alam Duta K ...
Thursday, 26 April 12
DRY BULK CARRIERS RENTER FLEET AFTER IDLING, ON MARKETS RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market seems to be back on track, not only solidifying the gains of the past couple of weeks, but also racing to new heights, recuperra ...
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- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- The University of Queensland
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- PTC India Limited - India
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
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