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