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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, 19 August 10
INDONESIA EXPORTED 5.93 MLN TON OF COAL TO CHINA AND 3.52 MLN TONS TO INDIA IN JULY
COALspot.com: Indonesia shipped 3.52 million tones of thermal coal to India in July, fell 25.39 percent compared to June's exports of 4.71 million ...
Thursday, 19 August 10
WBPDCL INDIA LAUNCHES SPOT COAL TENDER
COALspot.com: The West Bengal Power Development Corporation Limited (WBPDCL ), A Govt. of West Bengal Enterprise, has launched spot contract tender ...
Thursday, 19 August 10
PANAMAX BACKED BY A STRONGER SHORT PERIOD MARKET AND SUPPORTED BY SOME FRESH REQUIREMENTS - FEARNBULK
Handy
The events of this week have confirmed our assessment of last week i.e. activity gradually picked up in the Atlantic with more enquiry seen ...
Thursday, 19 August 10
CSC TO SHIP COAL FOR NOROCHCHOLAI POWER PLANT
Daily Mirror reported that, coal for the Norochcholai Power Plant will be shipped to the country by the Ceylon Shipping Corporation (CSC) officials ...
Wednesday, 18 August 10
MADHUCON TO START MINING AT SUMATRA BLOCK IN 2-3 MONTHS
DNA India reported that, Hyderabad-based Madhucon Projects is set to begin mining at one of its coal blocks in Indonesia in 2-3 months, said S Vaiku ...
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- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
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