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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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Monday, 13 September 10
FREIGHT MARKETS MAY BE A BIT SOFT THIS WEEK - VISTAAR SINGAPORE
COALspot.com: The freight market continued its upward trend with the BDI almost touching 3000 points. However the uncertainty seems to continue with ...
Friday, 10 September 10
INDONESIAN RAILWAY CONTRACT STILL UP FOR BIDDING - LOGISTICS WEEK
The tender process for a $2.2bn project to build a coal-transporting railway line in Central Kalimantan province, Indonesia, is still underway and n ...
Friday, 10 September 10
WCI INTO CHINA WITH IRON ORE ARE AIMING AROUND $ 20K - FEARNBULK
Handy
The rates are firm in every corner of the world. However it still looks Atlantic/Baltic/Black Sea offer better employment opportunities for ...
Thursday, 09 September 10
INDIANS BALCO TO BUY 50 K OF 3,000 TO 4,500 GAR CALORIFIC VALUE COAL
COALspot.com: Bharat Aluminium Company Limited (BALCO) is a subsidiary of Sterlite Industries (India) Limited and part of Vedanta Resources PLC, a L ...
Thursday, 09 September 10
INDONESIA SWAPS COAL FOR INFRASTRUCTURE - FT
As Asia’s major economies bound forward and their hunger for energy surges over the next decade, Indonesia is strategically positioned to take ...
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- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
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- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
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- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
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- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
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