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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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Tuesday, 15 February 11
INDONESIAN COAL FOR HARYANA THERMAL PLANTS - PUNJAB NEWS LINE
To tide over the recurring coal shortage at thermal plants Haryana Power Generation Corporation Limited (HPGCL) has gone for Malaysian coal for its ...
Tuesday, 15 February 11
TONNAGE OVERSUPPLY TO CHOKE FREIGHT RATES IN THE COMING MONTHS SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In a new report assessing the dry bulk market, BIMCO’s analysis suggests that freight rates for Capesize vessels are likely to remain depresse ...
Sunday, 13 February 11
COAL MARKETS 2011 TO HIGHLIGHT INDONESIAN COAL AND NEW SOURCES OF COAL SUPPLY
“Over 300 senior decision-makers from coal mining, power and trading companies expected to congregate in Singapore”
Press Release - K ...
Sunday, 13 February 11
YEAR OF RABBIT PUSHING FREIGHT MARKET UP
COALspot.com – “The market finally moved up with firmness in all sectors with some positive signs of markets recovering”, said Cap ...
Friday, 11 February 11
DRY BULK MARKET HEATING UP ON FRESH CARGO DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market is on a high this week, with owners of smaller vessels turning their attention towards the spot market, in order to take advanta ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
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- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Minerals Council of Australia
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- Bayan Resources Tbk. - Indonesia
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- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
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- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
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- Indonesian Coal Mining Association
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- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
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- The University of Queensland
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- Baramulti Group, Indonesia
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- India Bulls Power Limited - India
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- Chamber of Mines of South Africa
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- Trasteel International SA, Italy
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- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Australian Coal Association
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- Ministry of Finance - Indonesia
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- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
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- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
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- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
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- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
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- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Simpson Spence & Young - Indonesia
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- Bulk Trading Sa - Switzerland
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- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
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- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
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- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
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- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
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- Siam City Cement - Thailand
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- White Energy Company Limited
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
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- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
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