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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
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Wednesday, 20 May 09
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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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- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
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