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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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- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Bhatia International Limited - India
- White Energy Company Limited
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
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