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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, 25 March 10
THE INDIAN MARKET IS STILL FIRM - FEARNLEYS AS
Handy
A sluggish start to the week in the Atlantic with little fresh busin ...
Tuesday, 23 March 10
NINE COMPANIES WIN 20-YEAR COAL CONTRACTS - TEMPO
Tempo Interactive reported that, State Eletricity Company (Perusahaan Listrik Negara) revealed four joint ventures and one company winning coa ...
Monday, 22 March 10
INDONESIA`S MERUKH WINS US$3 BLN SWISS CONTRACT TO SUPPLY COAL - ANTARA
Antara Reported that, Indonesia's PT Merukh Enterprises said it has secured a 30-year contract to supply coal to Swiss buyer Glencore International ...
Monday, 22 March 10
INDIA TO IMPORT COLOMBIAN COAL FOR FIRST TIME AS DEMAND SURGES - BLOOMBERG
Bloomberg reported that, Adani Enterprises Ltd., India’s biggest coal importer, agreed to buy thermal coal from Colombia for the first t ...
Saturday, 20 March 10
NO MAJOR CHANGES ON SUPRAMAX MARKET FOR NEXT COUPLE OF WEEKS - VISTAAR
COALspot.com: “The dry bulk freight market continued to be firm on the Panamax and Supramax and Handy size vessels”, said Capt. Reddy MD ...
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- VISA Power Limited - India
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- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
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- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Australian Coal Association
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Planning Commission, India
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
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