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