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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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Monday, 28 December 09
SOMALI PIRATES SAY $4 MILLION RANSOM PAID FOR COAL SHIP
A helicopter dropped a $4 million ransom payment on Sunday on to the deck of a Chinese coal ship hijacked by Somali pirates in mid-October, a pirate ...
Saturday, 26 December 09
COAL INDIA, RIO TINTO MAY HOLD TALKS SOON ON TIE-UP
State owned Coal India Limited (CIL), which is in the race for acquisition of overseas coal properties to plug the demand supply shortfall of the dr ...
Saturday, 26 December 09
COKING COAL PRICES MAY RISE BY 10 - 15% FROM APRIL 2010
The price of coking coal, one of the key raw materials for steel production, is likely to increase by 10-15% in next April, the month in which m ...
Saturday, 26 December 09
COAL INDIA SECURES TWO BLOCKS IN MOZAMBIQUE
It's official now. Mozambique has awarded two coal acreages in its Maotize region with an estimated one billion tonne reserves to Coal India Ltd bu ...
Thursday, 24 December 09
DRY BULK CHARTERING - SHIPPING UPDATE
Handy
Continued firm conditions for the Handymax / Supramax market in the Atlantic despite the BSI´s downward trend. As chrs scramble to cov ...
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- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Parliament of New Zealand
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Mjunction Services Limited - India
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
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