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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, 15 March 12
RESOURCE ALAM FY11 PROFIT UP 171% - INSIDER STORIES
Insider Stories reported that, coal mining company PT Resource Alam Indonesia Tbk (KKGI) reported a 171.16% jump in net profit last year on the back ...
Wednesday, 14 March 12
GLOBAL THERMAL TRADE FLOW CHANGES WILL ENSURE SECURITY OF THERMAL COAL SUPPLY, ALBEIT AT A HIGH PRICE - WOOD MACKENZIE
Wood Mackenzie Says Global Thermal Trade Flow Changes Will Ensure Security of Thermal Coal Supply, Albeit At a High Price Seaborne thermal demand by ...
Wednesday, 14 March 12
COKAL TAKES ANOTHER STEP IN DEVELOPING INFRASTRUCTURE TO FACILITATE METALLURGICAL COAL PRODUCTION
Global coal group, Cokal Limited (ASX-CKA), has signed Memorandums of Understanding (MoU’s) to develop two river ports and two small scale coa ...
Tuesday, 13 March 12
CLARIFICATION OF GR 24 OF 2012 REQUIRING DIVESTMENT OF FOREIGN OWNERSHIP OVER TIME
ASX Announcement
Global metallurgical coal group, Cokal Limited (ASX-CKA), is responding to the recent announcement of the Indonesian Ministry of ...
Tuesday, 13 March 12
EUROPEAN COAL CONTANGO: FURTHER STEEPNESS REQUIRED TO MAKE LARGE SCALE PHYSICAL TIME SPREAD ARBITRAGE MORE ATTRACTIVE - MISWIN MAHESH, BARCLAYS CAPITAL
COALspot.com - "With the contango between the Y+1 and M+1 ARA delivered contract now averaging above the $14/t level, there is an increasing in ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- VISA Power Limited - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- MS Steel International - UAE
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- White Energy Company Limited
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- The University of Queensland
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
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