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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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Tuesday, 17 August 10
HANDIES AND SUPRAS WOKE UP AGAIN AFTER SEVERAL WEEKS OF LETHARGY - BRS
A spectacular increase in Cape size rates pushed the BDI up more than 20% this week, with demand for prompt tonnage in the Pacific causing a major s ...
Monday, 16 August 10
INDIA'S TNPL TO SUPPORT TNEB WITH COAL SUPPLIES
COALspot.com: TNPL to award 300,000 MT of coal supply contract to Nehel General Trading of India. Tamil Nadu state undertaking , Tamil N ...
Monday, 16 August 10
INDONESIA'S PLN SECURED COAL SUPPLIES, LESS IMPACT BY RAINS
COALspot.com: Indonesian State Electricity Company, PT Perusahaan Listrik Negara (PLN), has secured coal supplies for all of its power plants except ...
Sunday, 15 August 10
THE FREIGHT MARKET IS EXPECTED TO REMAIN FIRM - CAPT REDDY
COALspot.com: The BDI rose by almost 22 pct despite peak holiday season which is usually quite market , where as the BCI up sharply by 46 pct which ...
Saturday, 14 August 10
INDONESIAN THERMAL COAL PRICES EXPECTED TO MOVE UP IN SEPTEMBER 2010 - CHAIRMAN ICMA
COALspot.com: Indonesian Coal Mining Association is expecting, the Indonesian and international coal prices will increase, and will be reached ...
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- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- The University of Queensland
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Parliament of New Zealand
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- London Commodity Brokers - England
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
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