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