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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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Sunday, 20 March 11
FREIGHT MARKETS COULD SOFTEN NEXT WEEK DUE TO JAPANESE PORTS CLOSURE AND LIBYAN CRISIS - VISTAAR
COALspot.com - The BDI was down by 1.98 pct (closing at 1531 points) mainly due to Cape index which was down by almost 11 pct and closed 1687 points ...
Friday, 18 March 11
FALL IN INDONESIAN COAL EXPORTS IN FEBRUARY 11
COALspot.com - Indonesian coal exports seen a fall of 10.76% during Feb 2011. The world’s largest coal exporter shipped 22.029 MMts of c ...
Thursday, 17 March 11
THE PACIFIC HANDY MARKET IS CURRENTLY STEADY - FEARNBULK
Handy
The Atlantic market is showing signs of recovery and does not seem to be affected by the Japan disaster. The market is very positional and i ...
Tuesday, 15 March 11
COAL PRODUCTION FORECAST TO SURGE ON RISING PRICES - THE JAKARTA GLOBE
The Jakarta Globe reported that, Indonesia’s coal production is forecast to increase by 20 percent this year as coal prices continue to ...
Monday, 14 March 11
IRON ORE TRADING WORLD EUROPE 2011
Press Release - Strategy and opportunity for miners, steelmakers, end users and the financial community.
The iron ore spot market is growing at a ...
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- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Siam City Cement - Thailand
- Australian Coal Association
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- White Energy Company Limited
- McConnell Dowell - Australia
- Parliament of New Zealand
- Central Java Power - Indonesia
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