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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, 12 August 10
ETA STAR INDIA PUTS FORWARD COAL MINING PLAN FOR TETE, MOZAMBIQUE, IN 2011
ETA Star India Projects Pvt, which is carrying out coal prospecting and surveying work in the Moatize coal region, in Tete province, will present it ...
Thursday, 12 August 10
SUPRAS WERE FIXED IN THE MID/HIGH TEENS FOR INDO-INDIA TRIPS - FEARNBULK
Handy
Activity is gradually picking up in the Atlantic with more enquiries seen for short period tonnage for the end of August. With the grain sea ...
Thursday, 12 August 10
INDONESIAN COAL PRICE REFERENCE REACHED US$ 94.86 FOR AUGUST 2010 SUPPLIES
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
Wednesday, 11 August 10
BRAZILIAN GIANT VALE LOOKING TO BOOST ITS COAL OUTPUT
BRAZILIAN mining giant Vale is not content with being the world's largest iron ore miner. The miner is banking on ambitious growth plans to see it ...
Wednesday, 11 August 10
CAPESIZE MARKET ON RECOVERY MODE
The dry bulk market, usually dormant in August, has returned on a high note this week, after last week’s gains. Monday proved to be rather buo ...
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- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Australian Coal Association
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- PTC India Limited - India
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