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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, 04 March 10
THE INDIAN MARKET WAS STILL STRONG - FEARNRESEARCH
HANDY
Activity has gradually improved in the Atlantic throughout the week. All areas&n ...
Thursday, 04 March 10
GLOBAL COAL PRICES GETS SUPPORT FROM EM DEMAND
Commodity Online reported that, AP12 coal prices look well supported in 2010 thanks to positive outlook for Chinese coal demand whereas coal demand ...
Thursday, 04 March 10
THREE NEW GLOBAL PRICES INDEXES FOR COKING COAL
Commodity Online reported that, On February 26, Energy Publishing Co. broke new ground in the coal-marketing industry when it began publishing three ...
Tuesday, 02 March 10
INDIA WAS AGAIN THE WINNER IN THE EAST, WITH SUPRAMAXES FIXING CLOSE TO US$40,000/DAY FROM THE WEST COAST
There was little movement in the BDI this week but behind the scenes, the Supramax and Handy size segments posted significant gains, correcting the ...
Tuesday, 02 March 10
INDONESIA'S PROTECTED FORESTS NOW OPEN TO DEVELOPMENT
The Jakarta Globe reported that, President Susilo Bambang Yudhoyono has signed a decree to allow mining, power plants and other projects deemed stra ...
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- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- MS Steel International - UAE
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Australian Coal Association
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- The University of Queensland
- White Energy Company Limited
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