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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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Tuesday, 22 November 11
NTPC TO BUY 2 MMT OF IMPORTED COAL FOR ITS FOUR PLANTS
COALspot.com - NTPC Limited, incorporated in 1975 as a public sector company wholly owned by Government of India, the largest thermal power generati ...
Tuesday, 22 November 11
ABM INVESTAMA SETS IPO AT RP 3,750
Insider Stories reported that, Integrated energy company PT ABM Investama Tbk has determined the IPO price at Rp3,750 (approximately US$ 0.415) per ...
Tuesday, 22 November 11
A SURPRISINGLY STRONG WEEK FOR THE CAPES - BRS
Positive gains for most of the segments this week, the exception being the Handysizes. Overall the BDI ended the week at 1,895 points (+3.3% week-on ...
Tuesday, 22 November 11
APPETITE FOR DRY BULK VESSELS SLOWS DOWN AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was down at the beginning of the week, as demand for Capesize vessels was particularly low. The industry’s benchmark, the ...
Monday, 21 November 11
CAPESIZES DRIVE MARKET LOWER, ANALYSTS DIVIDED ON DRY BULK OUTLOOK IN THE LONG RUN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market ended the week on a sour note, with the industry’s benchmark heading downwards to 1,895 points, which represented a slight ...
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- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- Australian Coal Association
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
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