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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, 11 February 10
THE INDIAN MARKET SOFTENING A BIT - FEARNRESEARCH
Handy
The BSI has gone down for 3 weeks now but it is more a reflection of the Pac market. Activity in the Atl remains solid and rates remain firm ...
Thursday, 11 February 10
SOUTH AFRICA COAL EXPORTS DROP TO INDIA, CHINA
South African coal exports to India from Richards Bay Coal Terminal fell 39% in January from December's levels while shipments to China dropped 55% ...
Thursday, 11 February 10
JSW STEEL IS CLOSE TO ACQUIRING TWO COAL MINES IN THE US
“We are in advanced stages of negotiation and the deal will be completed in a month or two,” a company official told DNA Money on the co ...
Wednesday, 10 February 10
BHP TAKES MARUWAI SALE OFF THE TABLE, MINISTRY SAYS
Australian mining giant BHP Billiton may cancel a plan to sell a stake in its coal mining project in Maruwai, East Kalimantan, an official at the En ...
Wednesday, 10 February 10
JPMORGAN FORECASTS A 5.7% GROWTH IN SEABORNE IRON ORE SHIPMENTS, 3.8% FOR COAL AND GRAIN THIS YEAR
This year volumes of iron ore transportation by sea may grow to 5.7%, coal and grain up 3.8% over numbers in 2009, Ukrrudprom reports citing analyst ...
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- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- PTC India Limited - India
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
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