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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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Thursday, 15 December 11
DRY BULK RATES TO REMAIN AT CURRENT LEVELS FOR THE MOST PART IN THE COMING MONTHS SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest research note, BIMCO said that the Capesize Time Charter Average will remain at USD 20,000-30,000 per day but the tonnage oversupply w ...
Wednesday, 14 December 11
MINER TOBA BARA SEJAHTRA PLANS IPO IN 1ST HALF OF 2012 - THE JAKARTA GLOBE
The Jakarta Globe reported that, Coal miner Toba Bara Sejahtra is aiming high next year, hoping to capitalize on renewed bullish sentiment in the lo ...
Wednesday, 14 December 11
TIMAH PLANS TO BOOST ITS COAL PRODUCTION TO TWO MILLION TONS PER ANNUM - SOURCES
COALspot.com - Timah plans to boost its coal production to two million tons per annum. The company also expects to acquire coal concession with mini ...
Wednesday, 14 December 11
BORNEO RESOURCE INVESTMENTS LTD. FINALIZES ACQUISITION OF INTEGRA PRIMA
COALspot.com - Borneo Resource Investments Ltd., announced that it has finalized the acquisition of an additional 1,300 hectare coal mining concessi ...
Tuesday, 13 December 11
BERAU COAL SCOUTS US$1.61 BIO SALES - INSIDER STORIES
Insider Stories reported that, coal mining company PT Berau Coal Energy Tbk (BRAU), that is 85% owned by London-listed company Bumi Plc, estimates a ...
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- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- White Energy Company Limited
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- VISA Power Limited - India
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Parliament of New Zealand
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
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