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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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Friday, 09 March 12
SHIP OWNERS LOOKING TO CHINA FOR REVIVAL, WHILE THEY KEEP SELLING OLD SHIPS FOR SCRAP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With China’s economic policy plan for the future on every ship owner’s mind, at least those involved in the dry bulk industry, the lates ...
Thursday, 08 March 12
INDONESIA'S COAL SECTOR CAN BENEFIT FROM CLEARER REGULATIONS - FITCH RATINGS
Fitch Ratings says Indonesia's coal mining sector should continue to see strong growth prospects but can benefit from clearer and more predictable ...
Thursday, 08 March 12
DRY BULK MARKET ON THE RISE; CHINAS COAL IMPORTS COULD INCREASE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on rising back to healthier levels yesterday, with the BDI (Baltic Dry Index) the industry’s benchmark, marking its 8 ...
Wednesday, 07 March 12
INDONESIA COAL BENCHMARK PRICE GAINS FOR SECOND MONTH
COALspot.com - Indonesia raised the monthly coal reference price for sales in March by 1.15 percent, the second increase since February.
The Mini ...
Wednesday, 07 March 12
INDONESIA TO LIMIT FOREIGN OWNERSHIP IN MINES TO 49 PERCENT WITHIN 10 YEARS OF PRODUCTION
COALspot.com - Foreign holders of mining licenses in Indonesia have to divert 51% of their stakes to Indonesian government or domestic entitie ...
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- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
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