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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, 19 December 09
THE FUTURES FOR 2010 - 2012 FIRMED UP COMPARED TO LAST WEEK AND WAS AT AROUND CAPE US$ 28,000 PER DAY - VISTAAR
COALspot.com (Singapore): The freight market continued to soften this week with major drop in the cape size index by almost 21 pct and Panamax , Sup ...
Friday, 18 December 09
CARGOTEC WINS IBJ'S BEST SHIP LOADING / UNLOADING SYSTEM AWARD WITH SIWERTELL
Cargotec’s Siwertell ship unloader has recently won International Bulk Journal’s best ship loading/unloading system award for 2009; out ...
Friday, 18 December 09
THERMAL COAL PROJECT MOVES AHEAD
A proposal for Australia's largest thermal coal project in Queensland's central west has taken a step forward.
Hancock Prospecting is proposing ...
Friday, 18 December 09
CHURCHILL MINING COMPLETES FEASIBILITY STUDY FOR EAST KUTAI COAL PROJECT
Churchill Mining Plc has announced the completion of the feasibility study for its flagship project, the 75% held East Kutai coal project in Indones ...
Friday, 18 December 09
COKING COAL SHORTAGE IN CHINA TO SPUR DEMAND FIGHT WITH JAPAN
China, the world’s largest steelmaker, faces a shortage of coking coal that may drive imports next year and spur a fight for resources with Ja ...
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- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- PTC India Limited - India
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Meralco Power Generation, Philippines
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