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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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Monday, 23 May 11
BRMS IS TO START PRODUCTION FROM DAIRI PRIMA MINERALS
COALspot.com - The Presidential Decree No. 28 Year 2011 that allows conditional underground mining in the protected forest areas was issued on 19th ...
Sunday, 22 May 11
INDONESIA - INDIA IS LIKELY TO BE STEADY NEXT WEEK - VISTAAR SINGAPORE
COALspot.com - The freight market remained soft beginning of the week, however second half of the week was firm with BDI up by 3.29 pct and closed a ...
Saturday, 21 May 11
OWNERS PREFER TO DO INDO COAL OR NICKEL ORE TO CHINA RATHER THAN GOING TO INDIA - FEARNBULK
Handy
The Atlantic is marked by volatility and very positional, nevertheless USG,NCSA, Cont remain strong thanks to the petcoke, grains and scrap ...
Friday, 20 May 11
GOVT TOLD TO LIMIT COAL, GAS EXPORTS - THE JAKARTA POST
The Jakarta Post, a leading news paper in Indonesia, reported that, Amid soaring global oil prices, the government should limit exports of coal and ...
Thursday, 19 May 11
INDONESIAN COAL EXPORTS DROP 7.98 PERCENT IN APRIL
COALspot.com - Indonesian coal exports dropped to 2.168 million tons in April, and up 7.13 percent on the year and 7.98 percent below March, a ...
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- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- The University of Queensland
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
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