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