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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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Tuesday, 04 May 10
DRY BULK MARKET SOFTENING AGAIN ON LACK OF DIRECTION
The dry bulk market has put on the brakes once again, after the last session of the Baltic Dry Index ended at 3,354 points, down 5 from the previous ...
Monday, 03 May 10
AUSTRALIA PLANS 40 PERCENT TAX ON MINING PROFITS - THE JAKARTA POST
The Jakarta Post reported that, Australia would heavily tax the booming profits of its mining companies under a tax system overhaul proposed Sunday ...
Saturday, 01 May 10
THE PERIOD ACTIVITY WAS QUITE FIRM DURING THE WEEK - CAPT. REDDY
COALspot.com: The BDI was up by 11.32 pct which was mainly due to the firmness in capsize index which was up by 21.55 pct .
The other sectors Pan ...
Saturday, 01 May 10
EXPANDED SA COAL TERMINAL TO START OPERATIONS ON MAY 1 - MINING WEEKLY
Mining Weekly reported that, In line with expectations, the Richards Bay Coal Terminal (RBCT) had completed the R1,2-billion Phase V expansion ...
Thursday, 29 April 10
SOUTH AFRICAN ROUNDS BACK TO INDIA SUPRAS CAN ACHIEVE AROUND MID 20S
Handy
Atlantic markets remain firm. Supramaxes open in USG are now achieving low/mid&n ...
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- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- PTC India Limited - India
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Planning Commission, India
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- The University of Queensland
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
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