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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, 07 November 09
THE STEAM COAL MOVEMENT FROM INDONESIA TO INDIA REMAINED QUITE STRONG - CAPT. REDDY
COALspot.com (Singapore): The BDI continued rising this week and was up by 290 points up by almost 9 pct and the index closed at 3,393 points.
B ...
Friday, 06 November 09
COAL INDIA ABANDONS PLAN TO BUY ASSET IN AUSTRALIA
Coal India’s efforts to acquire a mid-sized virgin thermal coal block from a private party in Australia have drawn a blank.
The effort was ...
Friday, 06 November 09
NEW ASSETS WILL INCREASE COKING AND THERMAL COAL PRODUCTION
Coal and metals processing company Coal of Africa Limited (CoAL) aims to produce 10-million tons a year of coking coal and two-million tons a year o ...
Friday, 06 November 09
NTPC TO APPOINT MERCHANT BANKER FOR S AFRICA COAL MINE
State-run power producer NTPC, which is eyeing coal mines in South Africa to meet the gap in domestic fuel supply, will appoint a merchant banker ne ...
Thursday, 05 November 09
MERCATOR LINES AIMS TO BECOME A $5 BILLION COMPANY
Mercator Lines, India’s second largest private sector shipping line, plans to invest and expand, riding India’s next wave of growth, the ...
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- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Australian Coal Association
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
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