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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, 27 December 10
RIO TINTO EYES AUSTRALIAN COAL MINER - RTE NEWS
Global resources giant Rio Tinto has made a $3.9 billion bid for Australian coal miner Riversdale.
RTE News reported that, Global resources giant ...
Sunday, 26 December 10
ANGLO SELLS AUSTRALIAN COAL ASSETS - BARCELONA NEWS
Barcelona News reported that, Anglo American has sold off undeveloped Australia coal assets for $577 million.
The global resources giant ha ...
Saturday, 25 December 10
FREIGHT MARKET - LOWEST FIXTURES REPORTED SINCE MID 2009 - CAPT. REDDY
COALspot.com - We wish you a Merry Christmas and a Happy New Year 2011.
The holiday season seems to have severely affected the fr ...
Friday, 24 December 10
CIL SHORTLISTS 21 FIRMS TO IMPORT 250 MT COAL - THE HINDU
The Hindu reported that, Coal India plans to import about 250 million tonnes (mt) over the next 10 years to meet the country's growing requirement. ...
Friday, 24 December 10
DRY BULK OWNERS COULD SOON RECONSIDER SCRAPPING OLDER VESSELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market close to its lowest levels in months and indeed close to 2010 lows, ship owners could be heading towards scrapyards in a bi ...
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- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- White Energy Company Limited
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
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