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