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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, 13 June 09
CLEARLY THE DRIVER FOR DRY BULK MARKET SEEMS TO BE IMPORTS BY CHINA - VISTAAR SINGAPORE
COALspot.com (Singapore): The market saw mixed results last week. The beginning of the week saw the indices dropping including the futures , however t ...
Friday, 12 June 09
SOUTH SUMATERA SPEEDS UP INTERNATIONAL HARBOR CONSTRUCTION - TEMPO INTERACTIVE
The South Sumatera Government will speed up construction of the international harbor Tanjung Api-Api. The harbor is a strategic entry point for comm ...
Friday, 12 June 09
CHINA SHENHUA NOT EYEING NEW FOREIGN COAL MINES - MEDIA
China Shenhua Energy Co Ltd , the top Chinese coal miner, will not consider buying any major overseas mines before it starts operating the Watermark ...
Friday, 12 June 09
CHINA TOP POWER COS SIGN REGIONAL COAL DEALS - REUTERS
China's top five power generating groups have signed 2009 coal supply contracts with miners in Guizhou and Xinjiang, with prices up 4 percent on th ...
Friday, 12 June 09
MERCATOR LINES TARGETS 30 MILLION TONNE FROM MOZAMBIQUE COAL MINE - STEEL GURU
India’s second largest private shipping company Mercator Lines has targeted production of 30 million tonnes of coal from its Mozambique mine o ...
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- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
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