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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, 08 July 10
DRY BULK MARKET STILL PLUNGING, NOW STANDING AT 14 MONTH LOWS
The dry bulk shipping market’s demise isn’t over yet, as the industry’s main benchmark, the Baltic Dry Index (BDI) has been on a f ...
Wednesday, 07 July 10
MACQUARIE SEES CHINA COMMODITIES PRICE FALLS AND CUTBACKS AHEAD - MINEWEB
MineWeb reported that, The research arm of Australia's Macquarie Bank - one of the most reliable of China watchers - in its latest briefing on Chin ...
Wednesday, 07 July 10
COAL PRICES ON THE RISE
Caixin online reported that, China's domestic coal prices have seen a 26.2 percent year-on-year rise in May. Meanwhile, the volume of coal im ...
Tuesday, 06 July 10
INCREASE IN DRY BULK SPOT FIXTURES UNABLE TO BOOST RATES, LOSING STREAK CONTINUES
Yet another week began on a negative note for the dry bulk shipping market, with the Baltic Dry Index posting its 28th straight losing daily session ...
Tuesday, 06 July 10
KEPCO, POSCO BUY AUSTRALIAN COAL MINES - CHOSUN
Chosun reported that, Electricity monopoly KEPCO and steelmaker POSCO have both bought coal mines in Australia.
KEPCO signed a 400 million Austra ...
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- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- London Commodity Brokers - England
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Australian Coal Association
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Economic Council, Georgia
- Planning Commission, India
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Minerals Council of Australia
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
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