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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, 04 May 10
DRY BULK MARKET SOFTENING AGAIN ON LACK OF DIRECTION
The dry bulk market has put on the brakes once again, after the last session of the Baltic Dry Index ended at 3,354 points, down 5 from the previous ...
Monday, 03 May 10
AUSTRALIA PLANS 40 PERCENT TAX ON MINING PROFITS - THE JAKARTA POST
The Jakarta Post reported that, Australia would heavily tax the booming profits of its mining companies under a tax system overhaul proposed Sunday ...
Saturday, 01 May 10
THE PERIOD ACTIVITY WAS QUITE FIRM DURING THE WEEK - CAPT. REDDY
COALspot.com: The BDI was up by 11.32 pct which was mainly due to the firmness in capsize index which was up by 21.55 pct .
The other sectors Pan ...
Saturday, 01 May 10
EXPANDED SA COAL TERMINAL TO START OPERATIONS ON MAY 1 - MINING WEEKLY
Mining Weekly reported that, In line with expectations, the Richards Bay Coal Terminal (RBCT) had completed the R1,2-billion Phase V expansion ...
Thursday, 29 April 10
SOUTH AFRICAN ROUNDS BACK TO INDIA SUPRAS CAN ACHIEVE AROUND MID 20S
Handy
Atlantic markets remain firm. Supramaxes open in USG are now achieving low/mid&n ...
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- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Australian Coal Association
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Aditya Birla Group - India
- White Energy Company Limited
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- The University of Queensland
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
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