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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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Thursday, 12 March 09
ANALYSIS-FIRST NEW JAPAN COAL DEAL MAY NOT SET BENCHMARK - FOREXPROS.COM
* Informal coal-deal practice may come to an end this year
* Buyers expected to ask for a discount
* Biggest losers may be Chinese coal suppli ...
Thursday, 12 March 09
DEPARTMENT RECEIVES REPORT FROM GEOLOGICAL BODY AND NEDO - ESDM
The Geological Body of the Department of Energy and Mineral Resources have presented their Joint Study on Evaluation of Coal Resources and Reserves ...
Wednesday, 11 March 09
TENAGA SHARES CLIMB AS LOWER COAL PRICES CUT COSTS - BLOOMBERG
Bloomberg reported that, Tenaga Nasional Bhd., Malaysia’s state-controlled utility, climbed the most in a month in Kuala Lumpur trading as coal ...
Wednesday, 11 March 09
POSCO WINS 63% CUT IN PULVERIZED COAL PRICES, MACQUARIE SAYS - BLOOMBERG
Bloomberg reported that, Posco, Asia’s third-biggest steelmaker, has settled the first pulverized coal contracts for 2009 at $90 a metric ton ...
Wednesday, 11 March 09
COAL EXPORTERS FEEL THE CHILL FROM ASIAN DOWNTURN -BUSINESS.SMH.COM
Business.smh.com reproted that, The demand for thermal coal - NSW's most valuable export - has begun to reduce dramatically in response to the need ...
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- Orica Australia Pty. Ltd.
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- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
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- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
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- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
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- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
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- Wood Mackenzie - Singapore
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- The University of Queensland
- SMG Consultants - Indonesia
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- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
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- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Marubeni Corporation - India
- PTC India Limited - India
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
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- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
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