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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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Saturday, 12 November 11
BBJ WILL RELEASE A COAL CONTRACT
Jakarta Futures Exchange will soon release a coal futures contracts during the quarter 1 / 2012.
Director of the Jakarta Futures Exchange (BBJ) S ...
Saturday, 12 November 11
DRY BULK MARKET REGAINS SOME OF THE LOST GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market managed to edge forward yesterday, putting an end and halting the losses accumulated over the course of the past weeks, which ha ...
Friday, 11 November 11
PETROCOM ENERGY PLANS $40M TO BUILD COAL PLANT IN CILEGON - JP
The Jakarta Post reported that, Hong Kong-based Petrocom Energy Ltd has unveiled plans to invest up to US$40 million on a proposed coal-blending fac ...
Friday, 11 November 11
GOVT WAITS LEGAL DECISION ON BUKIT ASAM, ADARO DISPUTE - JP
The Jakarta Post reported that, The government says that it will not interfere in the settlement process of the dispute between state coal miner PT ...
Thursday, 10 November 11
INDONESIAN REFERENCE COAL PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has set the November 2011 Indonesian Coal Reference Price for thermal coal at U ...
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- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
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- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
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- SN Aboitiz Power Inc, Philippines
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- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
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- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- The State Trading Corporation of India Ltd
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- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
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- European Bulk Services B.V. - Netherlands
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- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
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- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
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- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- The University of Queensland
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- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
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- Bhoruka Overseas - Indonesia
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- Siam City Cement PLC, Thailand
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- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
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- Karbindo Abesyapradhi - Indoneisa
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- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
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- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
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- Bhatia International Limited - India
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
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- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
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- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
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- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
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- Coalindo Energy - Indonesia
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- Thiess Contractors Indonesia
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- Price Waterhouse Coopers - Russia
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- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
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