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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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Thursday, 12 March 09
ANALYSIS-FIRST NEW JAPAN COAL DEAL MAY NOT SET BENCHMARK - FOREXPROS.COM
* Informal coal-deal practice may come to an end this year
* Buyers expected to ask for a discount
* Biggest losers may be Chinese coal suppli ...
Thursday, 12 March 09
DEPARTMENT RECEIVES REPORT FROM GEOLOGICAL BODY AND NEDO - ESDM
The Geological Body of the Department of Energy and Mineral Resources have presented their Joint Study on Evaluation of Coal Resources and Reserves ...
Wednesday, 11 March 09
TENAGA SHARES CLIMB AS LOWER COAL PRICES CUT COSTS - BLOOMBERG
Bloomberg reported that, Tenaga Nasional Bhd., Malaysia’s state-controlled utility, climbed the most in a month in Kuala Lumpur trading as coal ...
Wednesday, 11 March 09
POSCO WINS 63% CUT IN PULVERIZED COAL PRICES, MACQUARIE SAYS - BLOOMBERG
Bloomberg reported that, Posco, Asia’s third-biggest steelmaker, has settled the first pulverized coal contracts for 2009 at $90 a metric ton ...
Wednesday, 11 March 09
COAL EXPORTERS FEEL THE CHILL FROM ASIAN DOWNTURN -BUSINESS.SMH.COM
Business.smh.com reproted that, The demand for thermal coal - NSW's most valuable export - has begun to reduce dramatically in response to the need ...
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- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Siam City Cement - Thailand
- London Commodity Brokers - England
- MS Steel International - UAE
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- The Treasury - Australian Government
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- The University of Queensland
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
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