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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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Thursday, 30 December 10
DRY BULK MARKET STAYS SUBDUED AT THE END OF 2010 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dy bulk market failed to cheer ship owners across the board as the year draws to an end, thus bringing mixed feelings ahead of 2011. On one hand ...
Thursday, 30 December 10
KANGAROO RESOURCES BUYS INDONESIAN COAL COMPANY
Australian-listed Kangaroo Resources Ltd. said Wednesday it will buy 99% of the Pakar thermal coal project in East Kalimantan, for A$277 million thr ...
Wednesday, 29 December 10
WEATHER IMPACTS RIO TINTO COAL AUSTRALIAS QUEENSLAND OPERATIONS
Press Release - As a result of severe monsoonal rain in central and northern Queensland, force majeure has been declared on coal sales contracts fro ...
Monday, 27 December 10
ANALYSIS: CHINA'S COAL PRODUCTION MISMATCHED WITH DOMESTIC DEMAND
As reported by iStock Analyst, China's coal market has been trapped in a strange cycle. Large coal production bases are facing overcapacity, while ...
Monday, 27 December 10
HUNT FOR OVERSEAS COAL ASSETS TO INTENSIFY - FINANCIAL EXPRESS
Financial Express reported that, With the Indian economy back on the track after the slowdown, merger and acquisition (M&A) activities in the re ...
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- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Australian Coal Association
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- ICICI Bank Limited - India
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- PTC India Limited - India
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