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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, 25 September 10
PRESSURE ON S6 AND S7 ROUTES SEEMS TO BE CONTINUED NEXT WEEK CAPT. REDDY
COALspot.com: The freight market has been flat this week due to holidays in China and low activity saw all sectors down and soft.
The BDI was dow ...
Thursday, 23 September 10
CHURCHILL MINING SHARES JUMP ON EAST KUTAI COAL PROJECT FEASIBILITY RESULTS - STOCKOPEDIA
AIM listed mining group Churchill Mining (LON:CHL) and its Indonesian partners the Ridlatama Group, have completed a feasibility study on the 2.73bn ...
Thursday, 23 September 10
DRY BULK RATES EXPECTEDLY FALL TO ONE MONTH LOWS - HELLENIC SHIPPING
With of the Far East trade routes closed this week on various national holidays, demand for ocean transportation of raw materials has been significa ...
Wednesday, 22 September 10
INDIA TO BE BIGGEST BUYER OF INDONESIAN COAL BY 2011 - BUSINESS STANDARD
India will pass Japan to be the biggest buyer of Indonesian coal by 2011, said Bob Kamandanu, chairman of the Indonesian Coal Mining Association.
...
Wednesday, 22 September 10
DRY BULK MARKET SENTIMENT TURNS SOUTH AS IRON ORE DEMAND DECLINES
The dry bulk market has once again turned the tide, with the industry’s benchmark, the Baltic Dry Index (BDI) turning south during the previou ...
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- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Mercator Lines Limited - India
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