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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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Wednesday, 20 May 09
CIL MAY URGE NEW GOVERNMENT TO HIKE COAL PRICE - STEELGURU
BL reported that soon after assuming office the new government may be faced with a proposal for an increase in prices of coal by Coal India Limited ...
Wednesday, 20 May 09
S.KOREA COAL IMPORTS IN APRIL DOWN 22 PCT Y/Y - REUTERS
South Korea's imports of heating coal in April fell 22 percent from a year earlier on bearish demand from domestic utilities, industry data showed ...
Wednesday, 20 May 09
THE WORLD'S TOP COAL TRADING COMPANIES - REUTERS
The international physical steam coal market has become increasingly liquid and tradeable during the past five years.
Physical global seaborne co ...
Wednesday, 20 May 09
SHIPPING INDEX RISES TO 7-MONTH HIGH AS CHINESE DEMAND ADVANCES - BLOOMBERG
The Baltic Dry Index, a measure of shipping costs for commodities, rose to a seven-month high in London on accelerating Chinese demand for iron ore. ...
Saturday, 16 May 09
FREIGHT MARKET HAS BEEN EXTREMELY BUOYANT - VISTAAR SINGAPORE
COALspot.com (Singapore): The week saw the BDI rally continuing and the market freight market has been extremely buoyant, VISTAAR Shipping Pte Limit ...
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- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- PTC India Limited - India
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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