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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, 08 February 13
NORTH P&I CLUB WARNS OF LIQUEFACTION RISK FOR BAUXITE CARGOES
The ‘A’ rated 170 million GT North P&I club has warned shipowners carrying bauxite aluminium ore cargoes that they have the potentia ...
Thursday, 07 February 13
CHINA NDRC APPROVED 10 BILLION YUAN POWER GENERATION PROJECTS
NDRC of China currently announced that some of power grid and power station in Jiangxu, Sichuan and Anhui Province would be newly constructed or ext ...
Thursday, 07 February 13
CAPESIZE : MORE ACTIVE WEEK IN THE PACIFIC - FEARNLEYS AS
Handy
The Atlantic market remained stable with no significant movement in rates. Rates from USG to FEast were around USD 18k and Black Sea to Feast ...
Thursday, 07 February 13
WEAK STEEL MARKET MEANS IRON ORE RALLY LIKELY TO END SOON - FITCH
The sharp rebound in iron ore prices over the last couple of months will hurt margins at non-integrated steel producers in the first quarter of 2013 ...
Tuesday, 05 February 13
THE SHIPPING SECTOR IS " NAVIGATING IN STORMY WATERS" - PWC
The vulnerabilities of the global economy have been exposed and have more than played their part in making 2011 one of the worst years of shipping i ...
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- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- MS Steel International - UAE
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Planning Commission, India
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- White Energy Company Limited
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
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