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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, 27 January 12
DEMOLITION ACTIVITY NEEDS TO INCREASE SIGNIFICANTLY THIS YEAR AS WELL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The oversupply of vessels in most shipping sectors is so intense that it’s become clear to ship owners that unless they scrap as many of their ...
Thursday, 26 January 12
ABM INVESTAMA SEALS US$100 MIO CONTRACT - INSIDER STORIES
Insider Stories reported that, PT Reswara Minergi Hartama, a subsidary of PT ABM Investama Tbk (ABMM), has sealed a 2 million tons of coal export co ...
Thursday, 26 January 12
DRY BULK MARKETS DOWNFALL KNOWS NO LIMITS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s demise seems to have no visible end, as China’s Lunar Year Holidays continue this week, thus leaving demand with n ...
Wednesday, 25 January 12
CLEAN AND CLEAR MINING PERMITS TO BE COMPLETED END OF 2012 - BISNIS.COM
Bisnis.com reported that, the government plans to announce 700 mining permits with "clean and clear" status without overlapping on other p ...
Tuesday, 24 January 12
ANOTHER SEVERE DROP IN THE CAPESIZE - BRS
The lunar year celebrations and the high number of new building deliveries (more than 35 Capes so far in January as owners push 2011 deliveries into ...
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- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- PTC India Limited - India
- Eastern Energy - Thailand
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- London Commodity Brokers - England
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- Planning Commission, India
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
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