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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, 11 February 10
THE INDIAN MARKET SOFTENING A BIT - FEARNRESEARCH
Handy
The BSI has gone down for 3 weeks now but it is more a reflection of the Pac market. Activity in the Atl remains solid and rates remain firm ...
Thursday, 11 February 10
SOUTH AFRICA COAL EXPORTS DROP TO INDIA, CHINA
South African coal exports to India from Richards Bay Coal Terminal fell 39% in January from December's levels while shipments to China dropped 55% ...
Thursday, 11 February 10
JSW STEEL IS CLOSE TO ACQUIRING TWO COAL MINES IN THE US
“We are in advanced stages of negotiation and the deal will be completed in a month or two,” a company official told DNA Money on the co ...
Wednesday, 10 February 10
BHP TAKES MARUWAI SALE OFF THE TABLE, MINISTRY SAYS
Australian mining giant BHP Billiton may cancel a plan to sell a stake in its coal mining project in Maruwai, East Kalimantan, an official at the En ...
Wednesday, 10 February 10
JPMORGAN FORECASTS A 5.7% GROWTH IN SEABORNE IRON ORE SHIPMENTS, 3.8% FOR COAL AND GRAIN THIS YEAR
This year volumes of iron ore transportation by sea may grow to 5.7%, coal and grain up 3.8% over numbers in 2009, Ukrrudprom reports citing analyst ...
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- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Central Electricity Authority - India
- Planning Commission, India
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- The University of Queensland
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
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