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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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Friday, 26 February 10
BANPU PROFITS SURGE BY 54% TO RECORD B14BN ON BRISK SALES
Banpu Plc, Asean's largest coal miner, said its earnings surged to a record high of 14.23 billion baht last year, an increase of 54% on the previou ...
Thursday, 25 February 10
INDO / INDIA COAL TRIPS SUPRAS CAN ACHIEVE AROUND MID 10S - FEARNLEYS AS
Handy
The BSI regained positive momentum exactly a week ago and the Atlantic rema ...
Thursday, 25 February 10
STEEP RISE IN COAL IMPORTS REQUIRED TO POWER INDIA - MONEYLIFE
The power ministry has estimated coal imports of 48 million tonnes in FY10-11, sharply higher than the expected imports of 28mt in the current fisca ...
Wednesday, 24 February 10
CHINA IMPORTED 8.81 MLN TONS OF INDONESIAN COAL IN JANUARY 2010
COALspot.com: Indonesia, the world largest coal exporter, exported 24.38 million tons of coal last month, compared with 27.46 million tons in a ...
Tuesday, 23 February 10
TRENDS..... DRY BULK MARKET .... TRENDS
The dry bulk market was pulled along by the Capes this week, as fresh enquiry breathed temporary life back into the market. Short period rates also ...
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- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- The University of Queensland
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Planning Commission, India
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- MS Steel International - UAE
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Australian Coal Association
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
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