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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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Friday, 04 October 13
US COAL PRODUCTION UP 2.1% WEEK ON WEEK - EIA
COALspot.com – United States the world’s second largest coal producer produced approximately 19.70 million short tons (mmst) of coal in ...
Thursday, 03 October 13
INDONESIA AUGUST COAL EXPORTS FALL 12.90 % FROM JULY TO 30.71 MIL MT
COALspot.com: Indonesia, the 15th largest economy in world, 4th largest coal producer in world and world's largest multi grade coal exporter ...
Thursday, 03 October 13
TOP FOUR U.S. COAL COMPANIES SUPPLIED MORE THAN HALF OF U.S. COAL PRODUCTION IN 2011 - EIA
In the past two years, more than half of U.S. coal production was attributable to the top four coal producers, the result of changes in regional pro ...
Thursday, 03 October 13
HANDY: PERIOD MARKET STAND IN GOOD POSITION - FEARNRESEARCH
Handy
Nickel ore and Bauxite was active last week but slowed down now due to Chinese holidays. Ships opened in North China fixed at US$ 11-13k leve ...
Wednesday, 02 October 13
DRY BULK MARKET IS STILL MAINTAINING ITS UPWARD DIRECTION
Chartering (Wet: Stable- / Dry: Firm+)
Despite the fact that rates for Capes didn't continue their crazy ride this past week, the Dry Bulk market ...
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- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- White Energy Company Limited
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Economic Council, Georgia
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
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