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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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Saturday, 15 May 10
THE AVERAGE CHARTER HIRE FOR CAPE REACHES US$ 49,931 PER DAY - VISTAAR SINGAPORE
COALspot.com: "The freight market was extremely buoyant this week with BDI almost up by 9 pct and the market was very firm in Feast/SE Asia sec ...
Saturday, 15 May 10
DRY BULK MARKET POSTS HEALTHY WEEKLY GAINS
The dry bulk market has reached new highs this week, the second consecutive solid one, with the industry’s benchmark, the Baltic Dry Index (BD ...
Friday, 14 May 10
JSW BUYS COAL MINES IN US, PRODUCTION STARTS IN SEPT
JSW Steel on Friday said it has completed $100 million acquisition of coking coal assets in the US and will start production from September to parti ...
Friday, 14 May 10
KANGAROO RESOURCES TO ACQUIRE INDONESIAN COAL PROJECTS - PROACTIVE INVESTORS
Proactive Investors reported that, Kangaroo Resources (ASX: KRL) is preparing to complete the acquisition of its five outstanding Indonesian coal pr ...
Thursday, 13 May 10
CHINA CONCERNS TO TEST RAW MINERALS - THE AUSTRALIAN
The Australian reported that, COMMODITY prices will remain volatile and drop from recent highs as China's appetite for raw materials softens. James ...
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- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Economic Council, Georgia
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- PTC India Limited - India
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- The University of Queensland
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
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