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