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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, 07 September 09
VALE SPENT $300 MILLION AT MOZAMBIQUE COAL MINE
Bloomberg rported that, Vale SA, the world’s biggest iron- ore producer, has so far spent about $300 million of the $1.3 billion investment in ...
Monday, 07 September 09
INDIA MAY BOOST COAL IMPORTS FROM INDONESIA - PLAN JVS
WSJ reported taht, India agreed to study setting up joint ventures with Indonesian companies to acquire coal assets, and look at other means of impo ...
Monday, 07 September 09
INDIAN COAL MAY NOT POWER NEW UMPPS
The Economic Times reported that, bidders for new ultra mega power projects (UMPP) may not get assured coal supplies from domestic mines. As per the ...
Saturday, 05 September 09
THE ECI / CHINA (S7) ROUTE SOFTENED BY ALMOST 12% AND THE CHARTER HIRE WAS AT US$ 16,346 PER DAY - VISTAAR
COALspot.com (Singapore): The dry bulk market continued to be stable with the BDI almost same as last week at 2,415 points.The Panamax index went up b ...
Saturday, 05 September 09
SHANXI AIMS TO MAINTAIN 2009 COAL OUTPUT AT LAST YEAR'S LEVEL
Interfax-China reported that, Shanxi Province, the country's second-largest coal producing region, is aiming to keep its annual coal output a ...
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- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Parliament of New Zealand
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
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