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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, 17 November 11
DRY BULK MARKET INCHES FORWARD AND INTO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged higher yesterday, on the back of stronger demand for Capesize vessels and general improvement of sentiment on most of the ...
Thursday, 17 November 11
KOMIPO INVITES BIDS FOR 500K MT OF COAL
COALspot.com - Korea Midland Power Co. Ltd.(KOMIPO) is inviting bids for the supply of 500,000 Metric Tons of minimum 5700 kcal/kg coal of NAR bases ...
Thursday, 17 November 11
INDONESIAN GOVERNMENT PLANS TO ISSUE MORATORIUM ON COAL MINING LICENSE
COALspot.com - Energy and mineral resources ministry is plans to issue a moratorium on the issuance of coal mining licenses, after the anti-graft co ...
Wednesday, 16 November 11
KRISHNAPATNAM PORT BECOMES DEEPEST DRAFT PORT IN INDIA
COALspot.com - Krishnapatnam Port in its quest to be the best port in India has increased its draft to 17.5 meters, according to E-Mail statement fr ...
Wednesday, 16 November 11
CHINA'S INDONESIA COAL IMPORTS RISE IN OCTOBER
COALspot.com: Indonesia, the world largest coal exporter, shipped 31,162,688 MT of coal in October 2011.
China was a largest importer of Indonesi ...
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- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- The University of Queensland
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Parliament of New Zealand
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