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