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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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- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- VISA Power Limited - India
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Trasteel International SA, Italy
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