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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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Monday, 12 March 12
DELTA DUNIA 1M OVERBURDEN DROPS 3.1% - INSIDER STORIES
Insider Stories reported that, Indonesia's second largest coal mining contractor PT Delta Dunia Makmur Tbk (DOID) reported a 25 million bank ...
Monday, 12 March 12
DRY BULK RATES WILL REMAIN LOW IN 2012 SAYS DANISH SHIP FINANCE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its annual shipping survey Danish Ship Finance said that the current outlook for the Dry Bulk market seems unlikely to foster higher rates in any ...
Monday, 12 March 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The first days of March appear to be more encouraging for dry bulk operators, but the outlook is still gloomy for the rest of year with earnings for ...
Sunday, 11 March 12
FREIGHT RATES FOR INDONESIA TO INDIA WILL CONTINUE TO REMAIN FIRM- VISTAAR
COALspot.com - This week saw another upward trend with all indices up except for the Cape index.
The BDI was up by 6.87 pct closing at 824 points ...
Friday, 09 March 12
MINING IN INDONESIA: RESTRICTION ON FOREIGN INVESTMENT - SUNIL K KUMBHAT
COALspot.com - Recently Govt has passed regulation instructing foreign mining companies to reduce their ownership stake.
The regulation known as ...
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- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- PTC India Limited - India
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
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