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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 March 11
IRON ORE FROM INDIA HAS BEEN QUIET
Handy
Activity has been gradually rising in the Atlantic but it is mostly confined to the USG market. Short period basis redelivery Atlantic has b ...
Thursday, 03 March 11
TNPL INDIA LOOKING FOR 160,000 MT OF NON-COKING COAL
COALspot.com - Tamil Nadu Newsprint and Papers Ltd. is seeking to import 160,000 plus minus 5 percent metric tons of non-coking coal with Gross Calo ...
Wednesday, 02 March 11
MIXED FORTUNES FOR DRY BULK OWNERS THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Although the dry bulk market has been on the positive side this week, things still look quite uncertain in the near term, with most owners puzzled a ...
Wednesday, 02 March 11
INDIA, 2ND LARGEST IMPORTER OF INDONESIAN COAL IN 2010
COALspot.com: Indonesia, the world largest coal exporter, shipped 24.68 million tons of coal in January 2011, which was 1.19 percent higher Y-o- ...
Tuesday, 01 March 11
GANGAVARAM PORT, AN INDIAN MODERN PORT CREATES RECORD
COALspot.com - Gangavaram Port, the deepest and the most modern port in India creates yet another record by discharging 65349 MT Coking Coal in 24 h ...
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- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
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- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
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- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
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- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
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- Eastern Coal Council - USA
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- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
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- Romanian Commodities Exchange
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- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
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- Australian Coal Association
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- Electricity Generating Authority of Thailand
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- Coalindo Energy - Indonesia
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- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
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- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
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- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
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- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
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- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Kohat Cement Company Ltd. - Pakistan
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- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Indian Oil Corporation Limited
- Central Electricity Authority - India
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- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- PTC India Limited - India
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
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- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
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- Energy Link Ltd, New Zealand
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- AsiaOL BioFuels Corp., Philippines
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- Bangladesh Power Developement Board
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- GMR Energy Limited - India
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
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- VISA Power Limited - India
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- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
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- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
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- Ministry of Mines - Canada
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