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