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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, 25 December 11
THERMAL COAL PRICES GAINED UP TO 4.32 PERCENT
COALspot.com - globalCOAL index gained 4.32 percent to US$106.36 per ton in RBCT, benchmark for South Asia and West Europe markets, for the week end ...
Saturday, 24 December 11
CHINAS LEVEL OF GROWTH TO DETERMINE COURSE OF DRY BULK MARKET IN 2012 SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest report, shipbroker Intermodal attempted to find a silver lining in the tough year that was 2011, as well as what one could expect from ...
Friday, 23 December 11
SPOT PACIFIC CAPESIZE VESSELS HAVE COMMANDED HIGH PREMIUMS - FEARNLEYS
Handy
Rates in the Atlantic kept stable from last week, with a touch of negativity closer to the end. Less spot cargoes seen, and owners are ...
Friday, 23 December 11
CONTENTIOUS ISSUES IN CONTRACT RENEGOTIATION - THE JAKARTA POST
The government has been renegotiating mining contracts, especially those 30-40 years old, with almost all mining companies, including PT Freeport In ...
Friday, 23 December 11
LANCO JOINS HANDS WITH BUKIT ASAM FOR INDONESIAN POWER PROJECT
COALspot.com - PT Tambang Batubara Bukit Asam, Indonesia's state owned coal miner and Indian based Lanco Infratech Ltd plans to build steam power p ...
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- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- White Energy Company Limited
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Planning Commission, India
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
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