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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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Wednesday, 07 March 12
ASSESS ASIAS POTENTIAL, DEVELOPMENTS AND APPETITE FOR SHALE AT SHALE GAS SUMMIT
Press Release - Assess Asia’s Potential, Developments and Appetite for Shale at Shale Gas Summit on 23-24 Apr, 2012 in Beijing
China is rep ...
Wednesday, 07 March 12
3RD MOZAMBIQUE COAL CONFERENCE
3rd Mozambique Coal Conference
2-4 July 2012 | Joaquim Chissano International Conference Centre , Maputo, Mozambique
http://www.immevents.com/mo ...
Wednesday, 07 March 12
DRY BULK MARKET KEEPS UP TIMID REBOUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its rising momentum yesterday, rising for the eighth straight session, on the back of renewed demand for smaller bulk c ...
Wednesday, 07 March 12
BUKIT ASAM EYES 39% RISE IN COAL SALES - INSIDER STORIES
Insider Stories reported that, PT Bukit Asam Tbk is scouting a 39% increase in coal sales volume to 18.66 million tons this year from last year with ...
Wednesday, 07 March 12
PETROSEA SEALS US$188 MIO CONTRACT - INSIDER STORIES
Insider Stories reported that, coal mining contractor PT Petrosea Tbk has secured a US$188 million additional contract from its affiliated firm PT S ...
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- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Deloitte Consulting - India
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- The University of Queensland
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- Australian Coal Association
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
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