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