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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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Sunday, 04 October 09
GOVT THREATENS TO CANCEL COAL BLOCK ALLOTTED TO BINANI CEMENT
Economic Times reported that, The government has threatened to cancel a coal block allocated for captive use to Binani Cement saying the company see ...
Saturday, 03 October 09
SHORT PERIOD RATES FOR SUPRAMAX WAS AROUND US$ 17,000 PER DAY FOR VESSELS OPENING FAR EAST / SE ASIA - VISTAAR
COALspot.com (Singapore): The BDI firmed up this week by almost 8 pct to 2,357 points , the main reason being jump in Cape size index by almost 22 p ...
Friday, 02 October 09
C&O SEES INDONESIA COAL PURCHASES UP 20 PCT IN 2010
Reuters reported that, Dubai-based coal trader Coal & Oil (C&0) expects its coal purchases from Indonesia to increase by at least 20 percent ...
Thursday, 01 October 09
MJUNCTION LAUNCHES INDIA'S FIRST COAL SPOT PRICE INDEX
• Named 'MJcomposite, MJsteel, MJcement, MJpower' the value weighted index will benefit Indian coal buyers by minimising risk against pr ...
Wednesday, 30 September 09
INDIA CEMENTS SET TO PRODUCE POWER; EYES COAL MINE IN INDONESIA
Financial Express reported that, Tamil Nadu-based India Cements Ltd (ICL) has firmed up plans to produce power to meet its current and future requir ...
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- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- MS Steel International - UAE
- Australian Coal Association
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
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