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