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