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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, 19 August 10
INDONESIA EXPORTED 5.93 MLN TON OF COAL TO CHINA AND 3.52 MLN TONS TO INDIA IN JULY
COALspot.com: Indonesia shipped 3.52 million tones of thermal coal to India in July, fell 25.39 percent compared to June's exports of 4.71 million ...
Thursday, 19 August 10
WBPDCL INDIA LAUNCHES SPOT COAL TENDER
COALspot.com: The West Bengal Power Development Corporation Limited (WBPDCL ), A Govt. of West Bengal Enterprise, has launched spot contract tender ...
Thursday, 19 August 10
PANAMAX BACKED BY A STRONGER SHORT PERIOD MARKET AND SUPPORTED BY SOME FRESH REQUIREMENTS - FEARNBULK
Handy
The events of this week have confirmed our assessment of last week i.e. activity gradually picked up in the Atlantic with more enquiry seen ...
Thursday, 19 August 10
CSC TO SHIP COAL FOR NOROCHCHOLAI POWER PLANT
Daily Mirror reported that, coal for the Norochcholai Power Plant will be shipped to the country by the Ceylon Shipping Corporation (CSC) officials ...
Wednesday, 18 August 10
MADHUCON TO START MINING AT SUMATRA BLOCK IN 2-3 MONTHS
DNA India reported that, Hyderabad-based Madhucon Projects is set to begin mining at one of its coal blocks in Indonesia in 2-3 months, said S Vaiku ...
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- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- The University of Queensland
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
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