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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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Saturday, 20 November 10
ITALIAN STEAM COAL MARKET HAS RECOVERED - ITALIAN COAL ASSOCIATION
Press Release - This year Italy will import 17 million tons of steam coal, up 3% from 2009, and 5.5 million tons of coking coal and PCI, up 37% over ...
Friday, 19 November 10
WE'LL THINK ABOUT COAL TOMORROW - ANALYSIS
The future of coal generation in Russia is in question. The largest energy companies have abandoned their initial plans to switch their therma ...
Friday, 19 November 10
DRY BULK MARKET ON THE ROPES WITH BDI PLUNGING TO 2,164 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the panamax markets suffering the most this week, but a ray of hope for the capesize market, which appears to be stabilizing after days of fall ...
Thursday, 18 November 10
WORLD COAL ASSOCIATION WELCOMES NEW CHAIRMAN & SHENHUA GROUP AS NEW MEMBER 17 NOVEMBER 2010
Press Release – The premier global coal industry association marks its 25th anniversary with a new Chairman and welcomes China’s lar ...
Thursday, 18 November 10
MUNDRA PORT AWARDED BEST PRIVATE PORT - COMMODITY ONLINE / HELLENIC SHIPPING
Adani Group owned, Mundra Port has been awarded the Annual Indian Maritime Gateway Award for the Best Private Port of the Year for the third consecu ...
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- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Minerals Council of Australia
- MS Steel International - UAE
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
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