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