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