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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, 08 December 11
INDIA MAY SEE 41% ANNUAL GROWTH OF ITS COAL DEMAND DURING THE NEXT 5 YEARS - ICAP SHIPPING
India’s Ministry of Coal expects that India’s coal demand may face an annual 41% rise during the next 5 years, while its coal deficit is ...
Thursday, 08 December 11
HAREDA KRIDA GETS CONTRACT FROM BAYAN - INSIDER STORIES
Insider Stories reported that, coal miner PT Bayan Resources Tbk (BYAN), through its subsidiary dubbed PT Gunungbayan Pratamacoal (GPB), has signed ...
Thursday, 08 December 11
CAPESIZES LIFT DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize vessels yesterday helped lift the dry bulk market which had been falling since the start of the week on lower cargo demand. As a result the ...
Wednesday, 07 December 11
ABM INVESTAMA EYES RP6.3 TRIO REVENUE - INSIDER STORIES
Insider Stories reported that, an energy integrated company PT ABM Investama Tbk is eyeing a 1.5 folds increase in revenue this year from Rp4. ...
Tuesday, 06 December 11
DRY BULK MARKET ENDS RALLY, STARTS WEEK WITH FALL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a series of increases which saw the dry bulk market’s benchmark, the Baltic Dry Index (BDI) increasing close to 1,900 points and rates o ...
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- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- ASAPP Information Group - India
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- VISA Power Limited - India
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Economic Council, Georgia
- Marubeni Corporation - India
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
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