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