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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, 17 August 09
CHINESE COAL PURCHASE COULD START A TREND
ABC Rural reported that, The takeover of a major Australian coal mining company by Chinese-owned Yanzhou has raised fears coal markets could be domi ...
Saturday, 15 August 09
TWO / THREE YEAR CHARTER RATES FOR SUPRAMAX IS AROUND US$ 15,000-16,000 PER DAY - VISTAAR SHIPPING
COALspot.com (Singapore): The dry bulk market continued to be soft in the beginning of the week, however towards to end of the week the BDI recovere ...
Friday, 14 August 09
ASIA GREEN TO SELL MORE COAL
I Stock Analyst reported that, Asia Green Energy Plc (AGE) aims to increase its coal sales by 20 percent to 1 million tonnes this year, given the gl ...
Friday, 14 August 09
INDONESIA COAL-PRICES FALL TO $74, INDIA EYES SEPT CARGOES
Reuters reported that, Prices of power-station coal from Australia fell to around $74 a tonne as demand eased, while Indian buyers started to look f ...
Friday, 14 August 09
GUACOLDA STARTS THIRD COAL-FIRED UNIT
Macorship reported that, Chile’s Empresa Electrica Guacolda said that the third unit at its Guacolda coal-fired power plant began supplying po ...
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- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
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