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