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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, 21 October 10
WORLDS FIRST, SINGAPORE EXCHANGE TO CLEAR OTC INDONESIAN COAL SWAP - MONDOVISIONE
Mondovisione reported that, Singapore Exchange (SGX) will be the first exchange in the world to clear over-the-counter (OTC) Indonesian Sub-Bitumino ...
Thursday, 21 October 10
MEC WOOS INDIAN POWER FIRMS FOR 50% STAKE SALE - BUSINESS STANDARD
Business-Standard reported that, Singapore-based MEC Coal plans to rope in an Indian power company as a 50 per cent equity partner. It is believed t ...
Thursday, 21 October 10
CAPESIZE, A FANTASTIC WEEK WITH IMPROVED RATES IN BOTH BASINS - FEARNBULK
Handy Activity remains slow this week combined with a lack of fresh enquiry in the Atlantic. Indexes are all negative except Cape but it is worth no ...
Wednesday, 20 October 10
BLENDING OF IMPORTED COAL AT THERMAL PLANT UP TO 30 % MAY BE ALLOWED - PUNJAB NEWS LINE
Punjab News Line reported that, Indian government is considering allowing increase in the blending ratio of imported coal from 10 to 30 percent at t ...
Wednesday, 20 October 10
CANADIAN CHALLENGER ACQUIRES INDONESIAN COAL PROJECT
COALspot.com (Press Release): According to Challenger Deep Resources Corp's website and press release posted on the site, Challenger Deep Res ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- White Energy Company Limited
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- PTC India Limited - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Australian Coal Association
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Economic Council, Georgia
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- MS Steel International - UAE
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