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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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- Sical Logistics Limited - India
- Posco Energy - South Korea
- MS Steel International - UAE
- Deloitte Consulting - India
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Videocon Industries ltd - India
- The University of Queensland
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Australian Coal Association
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
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