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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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Saturday, 11 February 12
WILL HISTORY REPEAT ITSELF IN THIS SHIPPING CYCLE? - CLARKSONS / HELLENIC SHIPPING
A slightly dubious "best man" joke runs as follows… Best man (giving his wedding speech): "Have you noticed how history repeat ...
Friday, 10 February 12
TONNAGE KEEPS ON COMING - DREWRY
Drewry Maritime Research’s latest edition of its Dry Bulk Forecaster pulls no punches in its assessment of a market that looks certain to cont ...
Friday, 10 February 12
GIVE PERMIT POWERS TO GOVERNORS: MINERS - THE JAKARTA POST
The Jakarta Post reported that, following clashes between mining companies and local residents, the Indonesian Mining Association (IMA) wants to tra ...
Thursday, 09 February 12
AUSTRALIA'S EPIC TO ACQUIRE 15,500 HA COAL EXPLORATION LICENCES IN EAST KALIMANTAN, INDONESIA
COALspot.com - Epic Resources Limited to acquire two coal concessions in Kutai Barat regency, East Kalimantan, Indonesia.
According to company's ...
Thursday, 09 February 12
RESOURCE ALAM BUYS 28,521HA CONCESSIONS - INSIDER STORIES
Insider Stories reported that, PT Resource Alam Indonesia Tbk (KKGI), owned by Adijanto family, today announced acquisition of 75% interest in PT Ka ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Parliament of New Zealand
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- The University of Queensland
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Bharathi Cement Corporation - India
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