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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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Thursday, 30 December 10
DRY BULK MARKET STAYS SUBDUED AT THE END OF 2010 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dy bulk market failed to cheer ship owners across the board as the year draws to an end, thus bringing mixed feelings ahead of 2011. On one hand ...
Thursday, 30 December 10
KANGAROO RESOURCES BUYS INDONESIAN COAL COMPANY
Australian-listed Kangaroo Resources Ltd. said Wednesday it will buy 99% of the Pakar thermal coal project in East Kalimantan, for A$277 million thr ...
Wednesday, 29 December 10
WEATHER IMPACTS RIO TINTO COAL AUSTRALIAS QUEENSLAND OPERATIONS
Press Release - As a result of severe monsoonal rain in central and northern Queensland, force majeure has been declared on coal sales contracts fro ...
Monday, 27 December 10
ANALYSIS: CHINA'S COAL PRODUCTION MISMATCHED WITH DOMESTIC DEMAND
As reported by iStock Analyst, China's coal market has been trapped in a strange cycle. Large coal production bases are facing overcapacity, while ...
Monday, 27 December 10
HUNT FOR OVERSEAS COAL ASSETS TO INTENSIFY - FINANCIAL EXPRESS
Financial Express reported that, With the Indian economy back on the track after the slowdown, merger and acquisition (M&A) activities in the re ...
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- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- The University of Queensland
- London Commodity Brokers - England
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- VISA Power Limited - India
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
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