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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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Saturday, 13 June 09
CLEARLY THE DRIVER FOR DRY BULK MARKET SEEMS TO BE IMPORTS BY CHINA - VISTAAR SINGAPORE
COALspot.com (Singapore): The market saw mixed results last week. The beginning of the week saw the indices dropping including the futures , however t ...
Friday, 12 June 09
SOUTH SUMATERA SPEEDS UP INTERNATIONAL HARBOR CONSTRUCTION - TEMPO INTERACTIVE
The South Sumatera Government will speed up construction of the international harbor Tanjung Api-Api. The harbor is a strategic entry point for comm ...
Friday, 12 June 09
CHINA SHENHUA NOT EYEING NEW FOREIGN COAL MINES - MEDIA
China Shenhua Energy Co Ltd , the top Chinese coal miner, will not consider buying any major overseas mines before it starts operating the Watermark ...
Friday, 12 June 09
CHINA TOP POWER COS SIGN REGIONAL COAL DEALS - REUTERS
China's top five power generating groups have signed 2009 coal supply contracts with miners in Guizhou and Xinjiang, with prices up 4 percent on th ...
Friday, 12 June 09
MERCATOR LINES TARGETS 30 MILLION TONNE FROM MOZAMBIQUE COAL MINE - STEEL GURU
India’s second largest private shipping company Mercator Lines has targeted production of 30 million tonnes of coal from its Mozambique mine o ...
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- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- Parliament of New Zealand
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
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