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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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Saturday, 15 May 10
THE AVERAGE CHARTER HIRE FOR CAPE REACHES US$ 49,931 PER DAY - VISTAAR SINGAPORE
COALspot.com: "The freight market was extremely buoyant this week with BDI almost up by 9 pct and the market was very firm in Feast/SE Asia sec ...
Saturday, 15 May 10
DRY BULK MARKET POSTS HEALTHY WEEKLY GAINS
The dry bulk market has reached new highs this week, the second consecutive solid one, with the industry’s benchmark, the Baltic Dry Index (BD ...
Friday, 14 May 10
JSW BUYS COAL MINES IN US, PRODUCTION STARTS IN SEPT
JSW Steel on Friday said it has completed $100 million acquisition of coking coal assets in the US and will start production from September to parti ...
Friday, 14 May 10
KANGAROO RESOURCES TO ACQUIRE INDONESIAN COAL PROJECTS - PROACTIVE INVESTORS
Proactive Investors reported that, Kangaroo Resources (ASX: KRL) is preparing to complete the acquisition of its five outstanding Indonesian coal pr ...
Thursday, 13 May 10
CHINA CONCERNS TO TEST RAW MINERALS - THE AUSTRALIAN
The Australian reported that, COMMODITY prices will remain volatile and drop from recent highs as China's appetite for raw materials softens. James ...
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- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Central Electricity Authority - India
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- PTC India Limited - India
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Australian Coal Association
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
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