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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, 09 September 10
DRY BULK MARKET IS LOOKING TO INCREASE GAINS ON OCTOBER IRON ORE CONTRACTS
The “success” story that the dry bulk market has been displaying during the past couple of weeks is being materialized as we head toward ...
Tuesday, 07 September 10
INDIA IMPORTS 1.63 MLN T OF COAL FOR THE PERIOD 30 AUGUST - 5 SEPTEMBER - SOURCES
COALspot.com: India has imported 1.07 million tons of power plant coal, 0.520 mln tons of coking coal and around 41,000 mt of Anthracite coal for th ...
Tuesday, 07 September 10
GOVERNMENT DECLARED INDONESIAN COAL PRICE REFERENCE DECLINE FOR THIRD-STRAIGHT MONTH
COALspot.com: Indonesian thermal coal price reference, a monthly benchmark price declared by Ministry of Energy and mineral resources of Repub ...
Tuesday, 07 September 10
MERCATOR TO BUY COAL MINE IN INDONESIA THIS FISCAL
Mercator Lines, India’s second-largest shipping company which has diversified into coal mining, will buy a coal mine in Indonesia with more th ...
Monday, 06 September 10
DRY BULK MARKET GAINS 6.05% ON WEEK, BOOSTED BY CAPESIZE VESSELS
The dry bulk market is looking to capitalize last week’s gains of more than 6 percent in this week, as the capesize segment seems to be on a h ...
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- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Aditya Birla Group - India
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