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