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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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Saturday, 30 January 10
THE ECI / CHINA (S7) ROUTE SOFTENED BY $ 5,736 AND CLOSED AT $ 27,360 PER DAY - VISTAAR SHIPPING
COALspot.com (Singapore): The freight market continued to soften this week probably in anticipation of Chinese New year holidays.
BDI INDEX
...
Saturday, 30 January 10
INDONESIA TO CONSTRUCT 93 POWER PLANTS IN 2ND PROJECT
The government has announced its list of 93 power plants to be built under the second 10,000-megawatt (MW) power generation scheme.
"With th ...
Saturday, 30 January 10
COAL FIRMS TO KEEP NATION IN THE BLACK
Some Indonesian coal mining companies on Friday pledged to allocate a greater share of their production this year to meet domestic market obligation ...
Friday, 29 January 10
INDIA STEAM COAL IMPORTS TO DOUBLE, BOOST SOUTH AFRICA
* SAfrica seen shipping 75 pct of its coal to Asia in 2010
* Logistics woes hamper SAfrica exports, India imports
India's steam coal imports ar ...
Thursday, 28 January 10
THE IRON ORE EXPORTS FROM INDIA TO CHINA ARE DOWN AND THE RATES DROPPED
HANDY
The BSI has continued its downward trend confirming the softening of the Atlantic since the previous week and reflecting a correction of the ...
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- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Parliament of New Zealand
- Thai Mozambique Logistica
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- PTC India Limited - India
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Australian Coal Association
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
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