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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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Thursday, 08 April 10
NAPOCOR GETS ONE OFFER AT COAL TENDER - ABS CBN
ABS- CBN News reported that, Philippine power producer National Power Corp. (Napocor) is likely to buy 50,000 tons of steam coal from PT Berau Coal ...
Wednesday, 07 April 10
DRY BULK MARKET LOOKING FOR DIRECTION
The dry bulk market has kept a low profile during the past week, as evidenced by the small changes of a usually rather turbulent Baltic Dry Index (B ...
Tuesday, 06 April 10
NEWCASTLE COAL EXPORTS RISE 24%, SHIP QUEUE SHORTENS - BLOOMBERG
Bloomberg reported that, Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel used in power st ...
Tuesday, 06 April 10
UAE STEEL TRADERS FEAR LOSSES ON GLOBAL HIKE
A sudden spurt in the price of iron ore in the international market has caught local steel traders and manufacturers and a host of other steel-depen ...
Tuesday, 06 April 10
ASIAN INVESTORS EYE NIGERIA MARITIME INDUSTRY
Investors from the Asian region are considering investing in the Nigerian maritime sector, which has huge opportunities and potential. One of such p ...
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- MS Steel International - UAE
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Bhatia International Limited - India
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
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