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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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Sunday, 04 October 09
GOVT THREATENS TO CANCEL COAL BLOCK ALLOTTED TO BINANI CEMENT
Economic Times reported that, The government has threatened to cancel a coal block allocated for captive use to Binani Cement saying the company see ...
Saturday, 03 October 09
SHORT PERIOD RATES FOR SUPRAMAX WAS AROUND US$ 17,000 PER DAY FOR VESSELS OPENING FAR EAST / SE ASIA - VISTAAR
COALspot.com (Singapore): The BDI firmed up this week by almost 8 pct to 2,357 points , the main reason being jump in Cape size index by almost 22 p ...
Friday, 02 October 09
C&O SEES INDONESIA COAL PURCHASES UP 20 PCT IN 2010
Reuters reported that, Dubai-based coal trader Coal & Oil (C&0) expects its coal purchases from Indonesia to increase by at least 20 percent ...
Thursday, 01 October 09
MJUNCTION LAUNCHES INDIA'S FIRST COAL SPOT PRICE INDEX
• Named 'MJcomposite, MJsteel, MJcement, MJpower' the value weighted index will benefit Indian coal buyers by minimising risk against pr ...
Wednesday, 30 September 09
INDIA CEMENTS SET TO PRODUCE POWER; EYES COAL MINE IN INDONESIA
Financial Express reported that, Tamil Nadu-based India Cements Ltd (ICL) has firmed up plans to produce power to meet its current and future requir ...
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- Semirara Mining Corp, Philippines
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- The Treasury - Australian Government
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- Romanian Commodities Exchange
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- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
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- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Indian Oil Corporation Limited
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- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
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- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
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- Economic Council, Georgia
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- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
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- Planning Commission, India
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
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- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
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