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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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Monday, 28 December 09
SOMALI PIRATES SAY $4 MILLION RANSOM PAID FOR COAL SHIP
A helicopter dropped a $4 million ransom payment on Sunday on to the deck of a Chinese coal ship hijacked by Somali pirates in mid-October, a pirate ...
Saturday, 26 December 09
COAL INDIA, RIO TINTO MAY HOLD TALKS SOON ON TIE-UP
State owned Coal India Limited (CIL), which is in the race for acquisition of overseas coal properties to plug the demand supply shortfall of the dr ...
Saturday, 26 December 09
COKING COAL PRICES MAY RISE BY 10 - 15% FROM APRIL 2010
The price of coking coal, one of the key raw materials for steel production, is likely to increase by 10-15% in next April, the month in which m ...
Saturday, 26 December 09
COAL INDIA SECURES TWO BLOCKS IN MOZAMBIQUE
It's official now. Mozambique has awarded two coal acreages in its Maotize region with an estimated one billion tonne reserves to Coal India Ltd bu ...
Thursday, 24 December 09
DRY BULK CHARTERING - SHIPPING UPDATE
Handy
Continued firm conditions for the Handymax / Supramax market in the Atlantic despite the BSI´s downward trend. As chrs scramble to cov ...
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- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Minerals Council of Australia
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
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