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