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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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Tuesday, 22 September 09
AUSTRALIA SEES HIGHER ASIAN THERMAL COAL IMPORTS
* Asia '09 imports to rise 3.5%, vs pvs f'cast of 3.3% fall
* Asia 2010 thermal coal imports expected to rise 6.3 pct
* China to become net im ...
Tuesday, 22 September 09
PANAMA CANAL EXPANSION MAY AID COLOMBIA COAL TO ASIA
* Colombia producers hope for growth in Asia shipments
* Panama Canal will allow smaller coal Capesize vessels
* Australia, Indonesia to remain bi ...
Monday, 21 September 09
ACCC SET TO APPROVE NEWCASTLE COAL SHIPPING AGREEMENT
ABC reported that, The competition regulator says it is likely to approve a new agreement over coal loading arrangements at Newcastle.
Australian ...
Friday, 18 September 09
PEABODY ENERGY ESTABLISHES ASIAN COAL TRADING HUB IN SINGAPORE
Peabody Energy announced it has opened an office in Singapore that will serve as the new hub for Peabody COALTRADE International activities in South ...
Friday, 18 September 09
AUSTRALIA NEWCASTLE COAL PORT: SEEKS INTERIM QUOTA SYSTEM
Reuters reported that, Australia's Newcastle coal terminal wants to re-introduce an interim export quota system after a group of miners led by BHP ...
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- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Australian Coal Association
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Parliament of New Zealand
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
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