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