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