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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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Saturday, 25 September 10
PRESSURE ON S6 AND S7 ROUTES SEEMS TO BE CONTINUED NEXT WEEK CAPT. REDDY
COALspot.com: The freight market has been flat this week due to holidays in China and low activity saw all sectors down and soft.
The BDI was dow ...
Thursday, 23 September 10
CHURCHILL MINING SHARES JUMP ON EAST KUTAI COAL PROJECT FEASIBILITY RESULTS - STOCKOPEDIA
AIM listed mining group Churchill Mining (LON:CHL) and its Indonesian partners the Ridlatama Group, have completed a feasibility study on the 2.73bn ...
Thursday, 23 September 10
DRY BULK RATES EXPECTEDLY FALL TO ONE MONTH LOWS - HELLENIC SHIPPING
With of the Far East trade routes closed this week on various national holidays, demand for ocean transportation of raw materials has been significa ...
Wednesday, 22 September 10
INDIA TO BE BIGGEST BUYER OF INDONESIAN COAL BY 2011 - BUSINESS STANDARD
India will pass Japan to be the biggest buyer of Indonesian coal by 2011, said Bob Kamandanu, chairman of the Indonesian Coal Mining Association.
...
Wednesday, 22 September 10
DRY BULK MARKET SENTIMENT TURNS SOUTH AS IRON ORE DEMAND DECLINES
The dry bulk market has once again turned the tide, with the industry’s benchmark, the Baltic Dry Index (BDI) turning south during the previou ...
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- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Planning Commission, India
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
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