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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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Sunday, 18 March 12
BUKIT ASAM'S NET PROFIT IN 2011 ROSE 54% TO US$ 339.56 MILLION
COALspot.com - Company revenue for the period January - December 2011 amounting to Rp 10.6 trillion (approximately US$ 1,164,835,164.84) recorded an ...
Saturday, 17 March 12
THE FREIGHT RATES FOR INDONESIA TO INDIA REMAINED FIRM - VISTAAR SINGAPORE
COALspot.com - The market continued to be firm and all segments were up except for Cape Index which was down by 2.46 pct closing at 1,466 points.
...
Saturday, 17 March 12
INDIAN GOVT FINALIZES DRAFT BILL FOR COAL REGULATOR - PTI
The coal sector would soon get a regulator as the government has finalised a draft bill for the purpose, Coal Minister Sriprakash Jaiswal said Wedne ...
Friday, 16 March 12
THE PACIFIC MARKET IS FIRMING UP - FEARNLEYS AS
Handy
A slightly positive trend was seen last week in the Atlantic. Skaw-Passero deliveries fixed around USD 3k to US Gulf, while US Gulf deliveres ...
Thursday, 15 March 12
RAINS AVERAGE SELLING PRICE OF COAL WENT UP BY 22 % IN 2011
COALspot.com - PT. Resource Alam Indonesia Tbk, an Indonesian CCoW (3rd Generation) holder reported Wednesday a 171 percent increase in net profits ...
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- Kobexindo Tractors - Indoneisa
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- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
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- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
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- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
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- Independent Power Producers Association of India
- Parliament of New Zealand
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- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
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- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
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- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
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- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Eastern Coal Council - USA
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- Indonesian Coal Mining Association
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- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Economic Council, Georgia
- ASAPP Information Group - India
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
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- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
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- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
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- Pipit Mutiara Jaya. PT, Indonesia
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- Malabar Cements Ltd - India
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- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
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- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
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- Energy Link Ltd, New Zealand
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