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