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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, 08 July 10
DRY BULK MARKET STILL PLUNGING, NOW STANDING AT 14 MONTH LOWS
The dry bulk shipping market’s demise isn’t over yet, as the industry’s main benchmark, the Baltic Dry Index (BDI) has been on a f ...
Wednesday, 07 July 10
MACQUARIE SEES CHINA COMMODITIES PRICE FALLS AND CUTBACKS AHEAD - MINEWEB
MineWeb reported that, The research arm of Australia's Macquarie Bank - one of the most reliable of China watchers - in its latest briefing on Chin ...
Wednesday, 07 July 10
COAL PRICES ON THE RISE
Caixin online reported that, China's domestic coal prices have seen a 26.2 percent year-on-year rise in May. Meanwhile, the volume of coal im ...
Tuesday, 06 July 10
INCREASE IN DRY BULK SPOT FIXTURES UNABLE TO BOOST RATES, LOSING STREAK CONTINUES
Yet another week began on a negative note for the dry bulk shipping market, with the Baltic Dry Index posting its 28th straight losing daily session ...
Tuesday, 06 July 10
KEPCO, POSCO BUY AUSTRALIAN COAL MINES - CHOSUN
Chosun reported that, Electricity monopoly KEPCO and steelmaker POSCO have both bought coal mines in Australia.
KEPCO signed a 400 million Austra ...
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- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- The University of Queensland
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Australian Coal Association
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
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