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