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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, 30 September 11
MINING BILL CLEARED, FIRMS TO SHARE 26% PROFITS WITH LOCALS - NDTV
NDTV reported that, The Union Cabinet cleared the draft mining bill aimed at regulating mining activities Friday. The bill proposes a profit-sharing ...
Friday, 30 September 11
INDIAN IRON ORE MARKET GETTING ACTIVE - FEARNLEYS AS
Handy
The Atlantic market continued its strong trend with fresh cargoes entering the market. Vessels open US Gulf fixed tick above US$ 27k back to t ...
Friday, 30 September 11
KRISHNAPATNAM PORT WINS GLOBAL PORT & COAL PORT OF THE YEAR AWARDS
COALspot.com - Krishnapatnam Port, a dynamic new generation world class port located in the East Coast of India has been adjudged the winner in the ...
Thursday, 29 September 11
INDONESIA'S MINERS FACE AN UNCERTAIN FUTURE - RUPERT WALKER
An evolving regulatory framework for the country's minerals industry could threaten its profitability and stifle investment.
The five-year surge ...
Thursday, 29 September 11
DRY BULK MARKET FALLS MID-WEEK, FURTHER DROP EXPECTED NEXT WEEK ON CHINA HOLIDAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market, as reflected by the Baltic Dry Index (BDI) retreated by 0.36% yesterday reaching 1,920 points, with the Capesize segment suffer ...
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- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- The University of Queensland
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Planning Commission, India
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
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