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