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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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- Maheswari Brothers Coal Limited - India
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- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
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- Tata Chemicals Ltd - India
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- Power Finance Corporation Ltd., India
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- New Zealand Coal & Carbon
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- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Minerals Council of Australia
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- Energy Link Ltd, New Zealand
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- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
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- Singapore Mercantile Exchange
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- AsiaOL BioFuels Corp., Philippines
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- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
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- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
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- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
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- Independent Power Producers Association of India
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- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
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- Parry Sugars Refinery, India
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- Sindya Power Generating Company Private Ltd
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- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Planning Commission, India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- White Energy Company Limited
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Indo Tambangraya Megah - Indonesia
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- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
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- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- The University of Queensland
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
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- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
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