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