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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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Friday, 04 October 13
US COAL PRODUCTION UP 2.1% WEEK ON WEEK - EIA
COALspot.com – United States the world’s second largest coal producer produced approximately 19.70 million short tons (mmst) of coal in ...
Thursday, 03 October 13
INDONESIA AUGUST COAL EXPORTS FALL 12.90 % FROM JULY TO 30.71 MIL MT
COALspot.com: Indonesia, the 15th largest economy in world, 4th largest coal producer in world and world's largest multi grade coal exporter ...
Thursday, 03 October 13
TOP FOUR U.S. COAL COMPANIES SUPPLIED MORE THAN HALF OF U.S. COAL PRODUCTION IN 2011 - EIA
In the past two years, more than half of U.S. coal production was attributable to the top four coal producers, the result of changes in regional pro ...
Thursday, 03 October 13
HANDY: PERIOD MARKET STAND IN GOOD POSITION - FEARNRESEARCH
Handy
Nickel ore and Bauxite was active last week but slowed down now due to Chinese holidays. Ships opened in North China fixed at US$ 11-13k leve ...
Wednesday, 02 October 13
DRY BULK MARKET IS STILL MAINTAINING ITS UPWARD DIRECTION
Chartering (Wet: Stable- / Dry: Firm+)
Despite the fact that rates for Capes didn't continue their crazy ride this past week, the Dry Bulk market ...
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- London Commodity Brokers - England
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Wilmar Investment Holdings
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
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