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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, 22 June 12
GLOBAL ACTION NEEDED ON ENERGY POVERTY - WORLD COAL
Eradicating energy poverty is possibly the biggest challenge facing the world today. Like climate change it can only be addressed with a concerted g ...
Friday, 22 June 12
COAL: THE BACKBONE OF MODERN ELECTRICITY - ECOAL
Coal has been described as the "forgotten fuel," perhaps because many aren't aware of the huge role it plays in powering the global econo ...
Thursday, 21 June 12
DRY BULK MARKET ON THE RISE AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was on the rise once again yesterday, with the Baltic Dry Index (BDI), the industry’s benchmark, rising by 18 points, or 1 ...
Wednesday, 20 June 12
BDI MOVING HIGHER, PANAMAX AND SUPRAMAX VESSELS STRONGER, CAPESIZE RATES NEAR TO HISTORICAL LOWS OF DECEMBER 2008 - MARIA BERTZELETOU, HELLENIC SHIPPING
The dry market seems to follow the dynamic of the previous week with the Baltic Dry Index showing daily increases since June 8th, but is still stand ...
Tuesday, 19 June 12
SMALLER DRY BULK CARRIERS LIFT UP MARKET, PANAMAXES SET TO FALL SAYS ANALYST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Another rise for the dry bulk market was evident yesterday, as the industry’s benchmark, the BDI (Baltic Dry Index) was up for a ninth straigh ...
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- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Marubeni Corporation - India
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- White Energy Company Limited
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
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