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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, 20 November 11
THE FREIGHT MARKETS EXPECTED TO BE FIRM NEXT WEEK - VISTAAR
COALspot.com - The market continued to move up with all sectors gaining except for handy size.
The BDI was up by 3.26 pct and closed at 1895 poin ...
Friday, 18 November 11
MMTC SEEKS 1.365 MMT OF IMPORTED COAL
COALspot.com - India's MMTC, the largest trading company of India and a major trading company of Asia, has issued a term supply tender for 1.365Mt ...
Friday, 18 November 11
KPC, ARUTMIN OUTPUT REACHED 47.1 MIO TONS - INSIDER STORIES
PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia, reported 47.1 million tons of coal production in 9M 2011, according to Indiser Stories.
Insi ...
Friday, 18 November 11
THE ATLANTIC SUPRAMAX MARKET EXPERIENCED A STEADY AND FIRM TENDENCY
Handy
The Atlantic Supramax market experienced a steady and firm tendency this week. Especially the North Atlantic and Mediterranean position ...
Friday, 18 November 11
BERAU COAL 9M PROFIT SOARS 194.46% - INSIDER STORIES
Insider Stories reported that, PT Berau Coal Energy Tbk (BRAU), which is 84.7% owned by Bumi Plc, reported a 194.46% jump in net profit by end of Se ...
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- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- White Energy Company Limited
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- The University of Queensland
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
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