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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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Monday, 22 August 11
MACRO ECONOMICS - PETER SAND BIMCO / HELLENIC SHIPPING
The US is jeopardising the global recovery as job creation remains top challenge across the board.
Global economy: While growth in most emerging ...
Sunday, 21 August 11
SUPRAMAX AVAILABILITY WAS TIGHT DUE TO UPCOMING RAMADAN HOLIDAYS
COALspot.com - The financial markets have been in turmoil with all major stock exchanges down and uncertainty prevails. However the shipping market ...
Sunday, 21 August 11
TUAH TURANGGA ACQUIRES DUTA NURCAHYA
Coal miner PT Tuah Turangga Agung, a wholly owned subsidiary of PT United Tractors Tbk (UNTR) via PT Pamapersada Nusantara), has agreed to acquire 6 ...
Friday, 19 August 11
INDIAS CICTL HAS ACHIEVED ONE MILLION TONS OF DISCHARGE
COALspot.com - Chettinad International Coal Terminal (CICTL) in Ennore port, a state of the art mechanized coal terminal, which was inaugurated on 28t ...
Friday, 19 August 11
AUSTRALIAS' ATH TO ACQUIRE 60% OF APUAH COAL MINE IN INDONESIA
COALspot.com - Australian listed company, Atech Holdings Limited (ATH) has entered into a conditional binding term sheet to acquire 60 percent stake ...
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- Coastal Gujarat Power Limited - India
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- Power Finance Corporation Ltd., India
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- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- London Commodity Brokers - England
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- Karbindo Abesyapradhi - Indoneisa
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- The State Trading Corporation of India Ltd
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- TNB Fuel Sdn Bhd - Malaysia
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- McConnell Dowell - Australia
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- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
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- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
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- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
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- Australian Coal Association
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- Merrill Lynch Commodities Europe
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- Electricity Generating Authority of Thailand
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- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
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- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
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- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
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- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
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- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
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- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
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- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
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- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
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- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
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- PowerSource Philippines DevCo
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- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
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- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
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- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
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- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
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- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
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- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
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