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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, 13 September 10
FREIGHT MARKETS MAY BE A BIT SOFT THIS WEEK - VISTAAR SINGAPORE
COALspot.com: The freight market continued its upward trend with the BDI almost touching 3000 points. However the uncertainty seems to continue with ...
Friday, 10 September 10
INDONESIAN RAILWAY CONTRACT STILL UP FOR BIDDING - LOGISTICS WEEK
The tender process for a $2.2bn project to build a coal-transporting railway line in Central Kalimantan province, Indonesia, is still underway and n ...
Friday, 10 September 10
WCI INTO CHINA WITH IRON ORE ARE AIMING AROUND $ 20K - FEARNBULK
Handy
The rates are firm in every corner of the world. However it still looks Atlantic/Baltic/Black Sea offer better employment opportunities for ...
Thursday, 09 September 10
INDIANS BALCO TO BUY 50 K OF 3,000 TO 4,500 GAR CALORIFIC VALUE COAL
COALspot.com: Bharat Aluminium Company Limited (BALCO) is a subsidiary of Sterlite Industries (India) Limited and part of Vedanta Resources PLC, a L ...
Thursday, 09 September 10
INDONESIA SWAPS COAL FOR INFRASTRUCTURE - FT
As Asia’s major economies bound forward and their hunger for energy surges over the next decade, Indonesia is strategically positioned to take ...
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- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- Australian Coal Association
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- PTC India Limited - India
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
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