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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, 14 October 10
COAL PRICES AT QINHUANGDAO PORT UP - CAPITALVUE
Capitalvue reported that, prices of steam coal yielding 5,500 kilocalories per kilogram (kcal/kg) in Qinhuangdao Port have risen five yuan to 715-72 ...
Thursday, 14 October 10
DRY BULK MARKET MAINTAINS POSITIVE TREND ON FIRMER CHINESE IRON ORE DEMAND
The dry bulk market has kept its upward trend set since last week, with the industry’s main benchmark, the Baltic Dry Index (BDI) rising to 2, ...
Tuesday, 12 October 10
DRY BULK MARKET LOOKING FOR DIRECTION AFTER WEEK OF CAPESIZE GROWTH
The dry bulk market ended Monday unchanged from Friday’s closing, today standing at 2,695 points. In summary, the capesize and the supramax se ...
Tuesday, 12 October 10
COAL SPOT TRADING MAY SOOTH PRICING CONFLICTS - GLOBAL TIMES
Global Times reported that, Tianjin-based Bohai Commodity Exchange launched steam coal for spot trading for the first time Monday. Steam coal is mai ...
Monday, 11 October 10
INDONESIAN POWER PLANTS AND OTHER INDUSTRIES TO BURN 78.97 MLN TONS OF COAL IN 2011
COALspot.com: The Minister of Energy and Mineral Resources of Indonesia has issued a ministerial degree 2360 K/30/MEM/ 2010 related to Domestic mark ...
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- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Australian Coal Association
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
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