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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, 27 July 10
DRY BULK SPOT CARGO DEMAND SHARPLY UP, TRIGGERING RISE IN RATES
Hot on the heels of the dry bulk market’s first weekly gain in almost two months, Monday began on a similar note, with the Baltic Dry Index (B ...
Tuesday, 27 July 10
KANGAROO RESOURCES INKS 297MT COAL RESOURCE FOR TANUR JAYA PROJECT
Kangaroo Resources has reported JORC Code compliant open cut Coal Resources totalling 297 million tonnes for the Tanur Jaya Coal Project in East Kal ...
Monday, 26 July 10
INDONESIAN COAL PRICE REFERENCE FOR JULY 2010 IS US$ 96.65 PER TON FOB VESSEL
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
Monday, 26 July 10
BHATIA INTERNATIONAL, MIGHT GRAB THE MAJORITY OF COAL SUPPLY ORDER FROM MAHAGENCO
COALspot.com: Maharashtra State Power Generation Co., a provider of electricity to India’s commercial hub Mumbai, has received price bids from ...
Monday, 26 July 10
CEMENT MAKERS EXPLORE NEW FUELS TO REPLACE COAL - ECONOMIC TIMES
Economic Times reported that, As the cement industry reels under high raw material costs and reduced coal linkages, companies are exploring alternat ...
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- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
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- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
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- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
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