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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, 09 March 10
STRONG REBOUND IN ALL THE DRY BULK SEGMENTS THIS WEEK
There was a strong rebound in all the dry bulk segments this week, leading to an 18% jump in the Baltic Dry Index.
The Cape and Panamax markets s ...
Tuesday, 09 March 10
L&T POWER EYEING COAL MINES IN AUS, INDONESIA
L&T Power Development Company, a part of the Larsen & Tubro Group, plans to acquire coal mines in Australia and Indonesia, a top company off ...
Tuesday, 09 March 10
BHP AGREES SHORTER-TERM COAL DEALS WITH EUROPEAN, ASIAN CUSTOMERS
Diversified miner BHP Billiton on Monday reported that it had reached sales terms for a significant portion of its hard coking coal volumes for 2010 ...
Monday, 08 March 10
KPCL TO IMPORT 0.9 MILLION TON OF 6000 GCV COAL
COALspot.com: India's Karnataka Power Corporation Ltd is seeking to import 0.9 million metric tons of 6000 kcal/kg (adb) Gross Calorific Value stea ...
Monday, 08 March 10
CHINA SHIPPING TO CARRY MORE COAL FOR SHENHUA
Hellenic Shipping News reported that, China Shipping (Group) Company will expect to ship 40 million tons of coal for Shenhua Group in 2010, Li Shaod ...
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- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- The University of Queensland
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Indika Energy - Indonesia
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