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