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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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Sunday, 08 January 12
THARPAK CONSORTIUM FORMED TO DEVELOP MEGA ENERGY COMPLEX IN SINDH PROVINCE, PAKISTAN
Press Release: On January 5th, TharPak, LLC met with officials of the Embassy of Pakistan in Washington DC to introduce and announce the formation o ...
Saturday, 07 January 12
COAL MARKETS SEE FALLING SPOT PRICES
COALspot.com – World’s thermal coal spot prices have slipped this week..
globalCOAL index in Newcastle Port, benchmark for Asian mark ...
Friday, 06 January 12
COAL INDIA LINKED COAL PRICES WITH INTERNATIONAL COAL PRICES
COALspot.com - Consumers of indigenous coal in India to pay International prices in the future. Coal India has recently moved from UHV pricing mecha ...
Friday, 06 January 12
CLARIDEN GLOBAL BRINGS YOU INDONESIA MINING 2012
Capitalizing Business & Investment Opportunities in an Uncertain Market.Press Release - Clariden Global brings you Indonesia Mining 2012, the dedi ...
Friday, 06 January 12
THE PANAMAX MARKET EXPERIENCED A SLOW START TO 2012 - FEARNLEYS AS
Handy
As usual after a holiday owners and charterers both try to get a feel of the market. An Armada of Supras were talking to ballast towards USG, ...
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- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- The University of Queensland
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- CNBM International Corporation - China
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Australian Coal Association
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
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