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