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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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- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- The University of Queensland
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
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