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