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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, 21 February 13
SPRING COAL PROCUREMENT 2013 IS ABOUT TO TAKE PLACE
In 2012, “Steady Growth” had set the keynote for China’s economic development. Guided by the principle of progressing steadily, do ...
Wednesday, 20 February 13
BAKRIE GROUP LOOKS TO HAVE A CLEAR UPPER HAND - LUCKY ARIESANDI, CFA
The Bakrie-Rothschild saga is entering its final stage, with Bumi Plc (BUMI LN)’s holders to convene on 21 Feb at 11am GMT to vote on Nat Roth ...
Tuesday, 19 February 13
NEWCASTLE PORT SHIPPED 38.65 PERCENT LESS COAL W-O-W
COALspot.com - Newcastle port in Australia has loaded 1,820,559 MT of thermal and coking coal for week ended 0700 hours 18 February 2013, Newc ...
Monday, 18 February 13
78.75 MILLION TONS OF COAL RESERVES ARE NEWLY PROVEN IN WUGANG HUNAN PROVINCE
COALspot.com - Recently, Wugang City, known as the CHINA hundred key coal producing cities, achieved new breakthroughs in coal exploration: deep coa ...
Sunday, 17 February 13
STEEL DEMAND WILL HELP TO PUSH UP FREIGHT RATES - VISTAAR
COALspot.com - This freight market has been fairly steady week ended 15 February 2013.
The BDI was slightly up by 0.67 pct closing at 753 points ...
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- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
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- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
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- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Wood Mackenzie - Singapore
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- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
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- Toyota Tsusho Corporation, Japan
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- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
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- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
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- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- The University of Queensland
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Posco Energy - South Korea
- White Energy Company Limited
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
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- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
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- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
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- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
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- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
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