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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, 08 February 13
NORTH P&I CLUB WARNS OF LIQUEFACTION RISK FOR BAUXITE CARGOES
The ‘A’ rated 170 million GT North P&I club has warned shipowners carrying bauxite aluminium ore cargoes that they have the potentia ...
Thursday, 07 February 13
CHINA NDRC APPROVED 10 BILLION YUAN POWER GENERATION PROJECTS
NDRC of China currently announced that some of power grid and power station in Jiangxu, Sichuan and Anhui Province would be newly constructed or ext ...
Thursday, 07 February 13
CAPESIZE : MORE ACTIVE WEEK IN THE PACIFIC - FEARNLEYS AS
Handy
The Atlantic market remained stable with no significant movement in rates. Rates from USG to FEast were around USD 18k and Black Sea to Feast ...
Thursday, 07 February 13
WEAK STEEL MARKET MEANS IRON ORE RALLY LIKELY TO END SOON - FITCH
The sharp rebound in iron ore prices over the last couple of months will hurt margins at non-integrated steel producers in the first quarter of 2013 ...
Tuesday, 05 February 13
THE SHIPPING SECTOR IS " NAVIGATING IN STORMY WATERS" - PWC
The vulnerabilities of the global economy have been exposed and have more than played their part in making 2011 one of the worst years of shipping i ...
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- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Australian Coal Association
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- PTC India Limited - India
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- CNBM International Corporation - China
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
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