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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, 21 February 11
CHURCHILL MINING RECEIVES SIGNIFICANT INTEREST, PROPOSALS TO DEVELOP EAST KUTAI COAL PROJECT - PROACTIVE INVESTORS
Proactive Investors reported that, Churchill Mining has received a number of specific proposals to fund and develop its massive East Kutai coa ...
Monday, 21 February 11
ABOLISH 5% DUTY ON COAL IMPORTS: SHINDE
Indian Express reported that, with acute coal shortage of domestic coal threatening to destabilise its power generation plans, the power ministry ha ...
Saturday, 19 February 11
THE FREIGHT MARKET EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - The market was quite firm this week with freight rates in South east asia and India/Feast almost up by 30 pct.
However towards end ...
Thursday, 17 February 11
COAL-GEN EUROPE 2011 REAFFIRMS THE IMPORTANCE OF COAL
Press Release: The third COAL-GEN Europe conference and exhibition, kicked off on Tuesday 15 February, with leading experts, professionals and compa ...
Thursday, 17 February 11
UNCERTAINTY AND VOLATILITY - FEARNBULK
Handy
Recovering market as evidenced by the solid USD 16k/day achieved by a handymax from Continent to east Med with scrap. More short period requ ...
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- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- The University of Queensland
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Economic Council, Georgia
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
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