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