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