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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 September 10
DRY BULK MARKET HEADS SOUTH ONCE MORE WITH MARKET SENTIMENT TAKING A CAUTIOUS APPROACH - HELLENIC SHIPPING
The dry bulk market didn’t manage to maintain the slightly upward momentum it had established during the first two session of the week, with t ...
Wednesday, 29 September 10
MOZAMBIQUE: COAL IN THREE MORE TETE DISTRICTS
All africa reported that, Coal deposits have been confirmed in the districts of Changara, Cahora Bassa and Magoe, in the western Mozambican province ...
Tuesday, 28 September 10
MMTC TO AWARD CONTRACT TO CEPL AND KNOWLEDGE TO SUPPLY 0.835 MILLION TONS OF IMPORTED COAL
COALspot.com: MMTC, India’s state owned trading company has opened three coal purchase tenders today.
According to our market sources, Coas ...
Monday, 27 September 10
DRY BULK: FREIGHT RATES CONTINUE TO FALL ON LOW ACTIVITY - HELLENIC SHIPPING
The dry bulk market didn’t manage to change its fortunes during the past week, with holidays across many Asian countries, predominantly China, ...
Saturday, 25 September 10
INDONESIA HAS EXPORTED 187.656 MILLION TONNES OF COAL IN EIGHT MONTHS
COALspot.com: Indonesia, the world largest coal exporter has exported 187.656 million tons of coal for the period January – August this ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Planning Commission, India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Australian Coal Association
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- The University of Queensland
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
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