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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, 07 June 10
SOUTH AFRICA COAL STAYS NEAR 18-MONTH HIGH ON EUROPEAN DEMAND - BLOOMBERG
Bloomberg Reported that, Prices for coal shipped from South Africa’s Richards Bay, the continent’s biggest export facility for the fuel, ...
Sunday, 06 June 10
THE DOWNWARD TREND FOR S6 AND S7 ROUTE IS LIKELY TO CONTINUE NEXT WEEK - VISTAAR
COALspot.com: "This seemed market heading for corrections with all sectors down", said, Capt. Reddy, MD of Vistaar Shipping Singapore, an ...
Sunday, 06 June 10
STEAM COAL MAY BECOME NEXT BOOMING COMMODITY IN AUSTRALIA - DB
Deutsche Bank predicts that thermal coal could become Australia's next booming commodity. The German investment bank's global thermal coal team ex ...
Friday, 04 June 10
INDO/INDIA AROUND THE MID 20'S LEVEL AND MID TO HIGH 20'S INDIA/CHINA
Handy
After a quiet end to last week, the Atlantic handysize market continued&nb ...
Thursday, 03 June 10
INDO GOVERNMENT TRIES TO CALM BUSINESSES FEARS OVER FOREST - CLEARING MORATORIUM
The Jakarta Globe reported that, as producers of coal and palm oil continued to howl, the government on Tuesday offered reassurances that the develo ...
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- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Australian Coal Association
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- The University of Queensland
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Parliament of New Zealand
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
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