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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, 28 August 10
THE FUTURES FOR THREE YEARS (2010-2012) WAS FIRM FOR CAPE AND PANAMAX VESSELS - VISTAAR
COALspot.com: The freight market appeared to be heading for correction with the indices coming off during later part of the week. The BDI closed 44 ...
Saturday, 28 August 10
KRISHNAPATNAM PORT SETS AN ALL INDIA COAL DISCHARGE RECORD
COALspot.com: Krishnapatnam Port has established all new record for coal discharged in India using the conventional system of coal unloading for por ...
Friday, 27 August 10
PAKISTAN WILL IMPORT 8 TO 10 PERCENT MORE COAL IN 2011
COALspot.com: Pakistan to import 4 million ton of coal in 2011 up by 8-10 percent compare to this year’s imports. "Pakistan's tota ...
Thursday, 26 August 10
CHARTERERS SWITCHING FROM PANAMAX TO CAPE STEMS DUE TO CAPE FALL
Handy
The activity picked up in the Atlantic with more enquiries seen for short period tonnage for end August/beg September - As the grain season ...
Wednesday, 25 August 10
BUKIT ASAM OUT TO BECOME BIGGEST COAL PRODUCER
The Jakarta Post reported that, State-owned PT Batubara Bukit Asam Tbk intends to become the country's biggest coal producer in 2016 with productio ...
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- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Planning Commission, India
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