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