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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, 16 November 09
141 VESSELS ARE EXPECTED TO LOAD 8.833 MILLION TONS OF INDONESIAN COAL BEFORE 30 NOVEMBER 2009
COALspot.com (Indonesia): 141 vessels are expected to load or sail with 8.833 million tons of Indonesian coal before 30 November 2009.
A source f ...
Sunday, 15 November 09
NALCO SHELVES SA PROJECT- PUTS IRAN PROJECT ON HOLD
The Economic Times reported that, In a twin decision on its global operations involving about Rs 27,000-crore (US$ 5.847billions) investment, the st ...
Saturday, 14 November 09
SHORT PERIOD RATES FOR SUPRAMAX WAS AT US$ 19,000 / 20,000 PER DAY FOR VESSELS OPENING FAR EAST / SE ASIA - VISTAAR SINGAPORE
COALspot.com (Singaproe): BDI continues to rally crossing the 4,000 mark. The BDI increased this week by 718 points up by 21 pct and closed at 4,111 ...
Saturday, 14 November 09
CHINA HAS BEEN THE LARGEST SINGLE BUYER OF INDONESIAN COAL IN OCTOBER, TAKING 24.37% OF TOTAL EXPORT QUANTITY OF 22.637 MILLION TONS
COALspot.com (Indonesia): China has been the largest single buyer of Indonesian coal in October 2009, taking 24.37% of total export quantity o ...
Saturday, 14 November 09
ASIA'S POWER SECTOR IS INVESTING IN COALMINES TO SECURE SUPPLIES
COALspot.com (Press Release): Asia Coal Power conference in Jakarta pinpoints growing power demand in Asia & Power sector investments in Indones ...
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- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
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- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
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- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
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- GAC Shipping (India) Pvt Ltd
- The University of Queensland
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- European Bulk Services B.V. - Netherlands
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- Toyota Tsusho Corporation, Japan
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- Heidelberg Cement - Germany
- Economic Council, Georgia
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- The Treasury - Australian Government
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- Ministry of Transport, Egypt
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- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
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- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
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- Straits Asia Resources Limited - Singapore
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- Indian Oil Corporation Limited
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
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- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
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- Thiess Contractors Indonesia
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- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
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- Metalloyd Limited - United Kingdom
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- Energy Development Corp, Philippines
- Latin American Coal - Colombia
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- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Romanian Commodities Exchange
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- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
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- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Electricity Authority, New Zealand
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- Grasim Industreis Ltd - India
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- Wood Mackenzie - Singapore
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- The State Trading Corporation of India Ltd
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- Global Green Power PLC Corporation, Philippines
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- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
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- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
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- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
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- Antam Resourcindo - Indonesia
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- Australian Coal Association
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- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
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- Semirara Mining and Power Corporation, Philippines
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- Planning Commission, India
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