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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, 14 December 09
SOUTH AFRICAN STEAM COAL PRICES FIRMING UP FOR Q1 TRADE
Reuters reported that Q1 South African coal prices firmed again slightly largely on Asian demand but European delivered prices were little changed.
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Sunday, 13 December 09
THE FREIGHT MARKET SEEMS TO BE COMING OFF A BIT AND THE MARKET MAY BE SOFT NEXT WEEK - CAPT. REDDY
COALspot.com (Singapore): "The market softened this week especially in the Cape and Panamax segment , where as the Supramax and Handy size was ...
Sunday, 13 December 09
NAPOCOR CUTS COAL IMPORT PROJECTION FOR 2010
STATE-RUN National Power Corp. slashed its planned coal importation for 2010 to only 200,000 metric tons from 3.4 million MT this year, as the gover ...
Sunday, 13 December 09
CHINESE BUYERS SEEK LARGE TONNAGE OF SOUTH AFRICA STEAM COAL
Reuters reported that Chinese utilities on the coast and inland are seeking several cape cargoes each of South African coal for 2010 delivery becaus ...
Saturday, 12 December 09
QUEENSLAND APPROVES A$4 BILLION COAL TERMINAL PROJECT
Queensland’s state government said it has signed a mandate approving development of the A$4 billion ($3.7 billion) Wiggins Island coal termina ...
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- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Planning Commission, India
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- PTC India Limited - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Economic Council, Georgia
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- White Energy Company Limited
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
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