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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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Monday, 02 January 12
THE PROMISE OF INDIA: A BRIEF INTERRUPTION? - CLARKSONS / HELLENIC SHIPPING
Future growth in Indian seaborne coal imports has sometimes been considered as one of the largest potential upsides in the currently oversupplied dr ...
Sunday, 01 January 12
IS INDIA FOLLOWING INDONESIA TO STANDARDIZE COAL PRICES TO GET MAXIMUM BENEFITS?
COALspot.com - Coal India limited, an Indian state owned and world largest coal producer has introduced gross calorific value (GCV) based pricing me ...
Saturday, 31 December 11
GLOBALCOAL NEWC INDEX SURGED 2.32 PERCENT
COALspot.com - globalCOAL index in Newcastle Port, benchmark for Asian market, ended substantially higher, surged 2.32 percent to US$115.47 per ...
Saturday, 31 December 11
BORNEO LUMBUNG TO BUY BUMI STAKE, SWAP CEO - THE JAKARTA GLOBE
The Jakarta Globe, one of the leading english news paper in Indonesia reported yesterday, shareholders of Indonesian coking coal miner Borneo Lumbun ...
Friday, 30 December 11
CENTRAL GOVERNMENT SHOULD ISSUE PERMITS - THE JAKARTA POST
The Jakarta Post reported that, business associations from both the palm oil and mining sectors have suggested that the central government should re ...
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- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
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- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Planning Commission, India
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Minerals Council of Australia
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- ASAPP Information Group - India
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
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