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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, 27 December 10
RIO TINTO EYES AUSTRALIAN COAL MINER - RTE NEWS
Global resources giant Rio Tinto has made a $3.9 billion bid for Australian coal miner Riversdale.
RTE News reported that, Global resources giant ...
Sunday, 26 December 10
ANGLO SELLS AUSTRALIAN COAL ASSETS - BARCELONA NEWS
Barcelona News reported that, Anglo American has sold off undeveloped Australia coal assets for $577 million.
The global resources giant ha ...
Saturday, 25 December 10
FREIGHT MARKET - LOWEST FIXTURES REPORTED SINCE MID 2009 - CAPT. REDDY
COALspot.com - We wish you a Merry Christmas and a Happy New Year 2011.
The holiday season seems to have severely affected the fr ...
Friday, 24 December 10
CIL SHORTLISTS 21 FIRMS TO IMPORT 250 MT COAL - THE HINDU
The Hindu reported that, Coal India plans to import about 250 million tonnes (mt) over the next 10 years to meet the country's growing requirement. ...
Friday, 24 December 10
DRY BULK OWNERS COULD SOON RECONSIDER SCRAPPING OLDER VESSELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market close to its lowest levels in months and indeed close to 2010 lows, ship owners could be heading towards scrapyards in a bi ...
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- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Malabar Cements Ltd - India
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