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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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Saturday, 30 January 10
THE ECI / CHINA (S7) ROUTE SOFTENED BY $ 5,736 AND CLOSED AT $ 27,360 PER DAY - VISTAAR SHIPPING
COALspot.com (Singapore): The freight market continued to soften this week probably in anticipation of Chinese New year holidays.
BDI INDEX
...
Saturday, 30 January 10
INDONESIA TO CONSTRUCT 93 POWER PLANTS IN 2ND PROJECT
The government has announced its list of 93 power plants to be built under the second 10,000-megawatt (MW) power generation scheme.
"With th ...
Saturday, 30 January 10
COAL FIRMS TO KEEP NATION IN THE BLACK
Some Indonesian coal mining companies on Friday pledged to allocate a greater share of their production this year to meet domestic market obligation ...
Friday, 29 January 10
INDIA STEAM COAL IMPORTS TO DOUBLE, BOOST SOUTH AFRICA
* SAfrica seen shipping 75 pct of its coal to Asia in 2010
* Logistics woes hamper SAfrica exports, India imports
India's steam coal imports ar ...
Thursday, 28 January 10
THE IRON ORE EXPORTS FROM INDIA TO CHINA ARE DOWN AND THE RATES DROPPED
HANDY
The BSI has continued its downward trend confirming the softening of the Atlantic since the previous week and reflecting a correction of the ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Interocean Group of Companies - India
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Planning Commission, India
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Australian Coal Association
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
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