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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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Monday, 21 February 11
CHURCHILL MINING RECEIVES SIGNIFICANT INTEREST, PROPOSALS TO DEVELOP EAST KUTAI COAL PROJECT - PROACTIVE INVESTORS
Proactive Investors reported that, Churchill Mining has received a number of specific proposals to fund and develop its massive East Kutai coa ...
Monday, 21 February 11
ABOLISH 5% DUTY ON COAL IMPORTS: SHINDE
Indian Express reported that, with acute coal shortage of domestic coal threatening to destabilise its power generation plans, the power ministry ha ...
Saturday, 19 February 11
THE FREIGHT MARKET EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - The market was quite firm this week with freight rates in South east asia and India/Feast almost up by 30 pct.
However towards end ...
Thursday, 17 February 11
COAL-GEN EUROPE 2011 REAFFIRMS THE IMPORTANCE OF COAL
Press Release: The third COAL-GEN Europe conference and exhibition, kicked off on Tuesday 15 February, with leading experts, professionals and compa ...
Thursday, 17 February 11
UNCERTAINTY AND VOLATILITY - FEARNBULK
Handy
Recovering market as evidenced by the solid USD 16k/day achieved by a handymax from Continent to east Med with scrap. More short period requ ...
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- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- The Treasury - Australian Government
- Australian Coal Association
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- MS Steel International - UAE
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
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