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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 April 10
NAPOCOR GETS ONE OFFER AT COAL TENDER - ABS CBN
ABS- CBN News reported that, Philippine power producer National Power Corp. (Napocor) is likely to buy 50,000 tons of steam coal from PT Berau Coal ...
Wednesday, 07 April 10
DRY BULK MARKET LOOKING FOR DIRECTION
The dry bulk market has kept a low profile during the past week, as evidenced by the small changes of a usually rather turbulent Baltic Dry Index (B ...
Tuesday, 06 April 10
NEWCASTLE COAL EXPORTS RISE 24%, SHIP QUEUE SHORTENS - BLOOMBERG
Bloomberg reported that, Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel used in power st ...
Tuesday, 06 April 10
UAE STEEL TRADERS FEAR LOSSES ON GLOBAL HIKE
A sudden spurt in the price of iron ore in the international market has caught local steel traders and manufacturers and a host of other steel-depen ...
Tuesday, 06 April 10
ASIAN INVESTORS EYE NIGERIA MARITIME INDUSTRY
Investors from the Asian region are considering investing in the Nigerian maritime sector, which has huge opportunities and potential. One of such p ...
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- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- The University of Queensland
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Australian Coal Association
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
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