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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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Monday, 14 June 10
S. AFRICA BOOSTS COAL SALES TO INDIA 12%, TRADER SAYS
Bloomberg reported that, South Africa’s Richards Bay, the world’s second-biggest coal export harbor, boosted sales to India by 12 percen ...
Sunday, 13 June 10
THE FUTURES FOR THREE YEARS (2010-2012) WAS AT AROUND CAPE/US$ 29000 PER DAY & PANAMAX/US$ 20500 PER DAY - VISTAAR
COALspot.com: The market continue to soften in all sectors and the most affected was cape size which was down by 16.32 pct. The BDI was down by 14.4 ...
Saturday, 12 June 10
BALTIC EXCHANGE ESTABLISHES ASIA-PACIFIC OFFICE
The London-based Baltic Exchange has today announced it is setting up an Asia-Pacific Representative Office in Singapore, to ensure closer contact w ...
Saturday, 12 June 10
NALCO TO ROPE IN PARTNERS FOR INDONESIA PROJECT
Sify reported that, the public sector National Aluminium Company (Nalco) is set to finalise the terms of its joint venture (JV) agreement with two f ...
Thursday, 10 June 10
CHARTERERS ARE NOT WILLING TO PAY THE RATES AS MARKET SLIDES
DRY BULK
Handy
Atlantic markets are quieter (Posidonia?) with less activity. Nevertheless expect some fresh enquiries f ...
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- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Planning Commission, India
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- The University of Queensland
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Australian Coal Association
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
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