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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, 25 March 10
THE INDIAN MARKET IS STILL FIRM - FEARNLEYS AS
Handy
A sluggish start to the week in the Atlantic with little fresh busin ...
Tuesday, 23 March 10
NINE COMPANIES WIN 20-YEAR COAL CONTRACTS - TEMPO
Tempo Interactive reported that, State Eletricity Company (Perusahaan Listrik Negara) revealed four joint ventures and one company winning coa ...
Monday, 22 March 10
INDONESIA`S MERUKH WINS US$3 BLN SWISS CONTRACT TO SUPPLY COAL - ANTARA
Antara Reported that, Indonesia's PT Merukh Enterprises said it has secured a 30-year contract to supply coal to Swiss buyer Glencore International ...
Monday, 22 March 10
INDIA TO IMPORT COLOMBIAN COAL FOR FIRST TIME AS DEMAND SURGES - BLOOMBERG
Bloomberg reported that, Adani Enterprises Ltd., India’s biggest coal importer, agreed to buy thermal coal from Colombia for the first t ...
Saturday, 20 March 10
NO MAJOR CHANGES ON SUPRAMAX MARKET FOR NEXT COUPLE OF WEEKS - VISTAAR
COALspot.com: “The dry bulk freight market continued to be firm on the Panamax and Supramax and Handy size vessels”, said Capt. Reddy MD ...
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- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
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- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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