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