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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, 02 December 10
INDIA'S COAL SHORTAGE TO DEEPEN NEXT YEAR - MONEY CONTROL
Money Control reported that, India's coal deficit will deepen sharply next year, its coal minister said on Tuesday, forcing Asia's third largest e ...
Thursday, 02 December 10
CIL INCHES CLOSER TO PEABODY STAKE DEAL - THE TELEGRAPH INDIA
The Telegraph India reported that, state-run Coal India Ltd (CIL) hopes to complete negotiations to buy over 10 per cent in Australian miner Peabody ...
Thursday, 02 December 10
DRY BULK MARKET WEIGHED DOWN BY CAPESIZE BLUES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The negative sentiment currently undergoing in the capesize market has kept the dry bulk market’s benchmark, the Baltic Dry Index (BDI) on the ...
Monday, 29 November 10
NUCLEAR SUPERTANKERS TO SHAKE UP SHIPPING - THIS IS MONEY
This is money reported that, plans are under way that could see nuclear-powered supertankers sailing the world’s shipping lanes, refuelling on ...
Sunday, 28 November 10
FREIGHT MARKET SEEMS TO BE NERVOUS - VISTAAR
COALspot.com - The freight market continued to remain uncertain even though only cape index was down by 8.31 pct.
Overall the market seems to be ...
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- Indika Energy - Indonesia
- MS Steel International - UAE
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- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
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- Parliament of New Zealand
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- CIMB Investment Bank - Malaysia
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- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
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- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
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- Chamber of Mines of South Africa
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- PNOC Exploration Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
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- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
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- London Commodity Brokers - England
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- SMG Consultants - Indonesia
- India Bulls Power Limited - India
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- Kartika Selabumi Mining - Indonesia
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- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- New Zealand Coal & Carbon
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- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
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- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Independent Power Producers Association of India
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- VISA Power Limited - India
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- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
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- Riau Bara Harum - Indonesia
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