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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, 30 March 12
RECOND NUMBERS SURROUNDING THE SUPRAMAX DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Last year proved to be both a record year in the number of deliveries of dry bulkers between 40,000dwt and 64,000dwt, as well as a record year in th ...
Thursday, 29 March 12
DRY BULK EDGED FURTHER UP, ON HEALTHY DEMAND FOR MOST SHIP TYPES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With capesize vessels finally reappearing in demand, the dry bulk market had an easier task of rising yesterday, as the BDI (Baltic Dry Index) reach ...
Thursday, 29 March 12
ADARO FY11 NET INCOME JUMPS 124% - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk (ADRO) today announced a 124% jump in net income to US$552 million last year or US$0.017 a share. ...
Wednesday, 28 March 12
CUESTA HAS RECEIVED APPLICATIONS AND FIRM BIDS IN EXCESS OF $9 MILLION FOR THE COMPANYS IPO
COALspot.com - The Directors of Cuesta Coal Limited (ASX:CQC) have announced that today it has received applications and firm bids in excess of $9 m ...
Wednesday, 28 March 12
ORPHEUS ENERGY TO COMMENCE JORC DRILLING AT ADK PROJECT
COALspot.com - Indonesian coal explorer and producer, Orpheus Energy (ASX:OEG), have today announced that the company is about to commence a drillin ...
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- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Australian Coal Association
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Bhatia International Limited - India
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
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