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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, 14 December 09
SOUTH AFRICAN STEAM COAL PRICES FIRMING UP FOR Q1 TRADE
Reuters reported that Q1 South African coal prices firmed again slightly largely on Asian demand but European delivered prices were little changed.
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Sunday, 13 December 09
THE FREIGHT MARKET SEEMS TO BE COMING OFF A BIT AND THE MARKET MAY BE SOFT NEXT WEEK - CAPT. REDDY
COALspot.com (Singapore): "The market softened this week especially in the Cape and Panamax segment , where as the Supramax and Handy size was ...
Sunday, 13 December 09
NAPOCOR CUTS COAL IMPORT PROJECTION FOR 2010
STATE-RUN National Power Corp. slashed its planned coal importation for 2010 to only 200,000 metric tons from 3.4 million MT this year, as the gover ...
Sunday, 13 December 09
CHINESE BUYERS SEEK LARGE TONNAGE OF SOUTH AFRICA STEAM COAL
Reuters reported that Chinese utilities on the coast and inland are seeking several cape cargoes each of South African coal for 2010 delivery becaus ...
Saturday, 12 December 09
QUEENSLAND APPROVES A$4 BILLION COAL TERMINAL PROJECT
Queensland’s state government said it has signed a mandate approving development of the A$4 billion ($3.7 billion) Wiggins Island coal termina ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Australian Coal Association
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Planning Commission, India
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
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