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