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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, 10 January 11
DEWA SEEKS ADVICE ON COAL POWER PROJECT -THE NATIONAL
The Dubai utility company gets nine bids from international groups for consultancy role.
The National reported that, Dubai's utility company wil ...
Saturday, 08 January 11
COAL PRICE WILL RISE IN SHORT-TERM DUE TO AUSTRALIA FLOODS - ALBUQUERQUE EXPRESS
Albuquerque Express reported that, Queensland’s mining minister, Stephen Robertson, has warned that the Australian state’s coal mines wi ...
Saturday, 08 January 11
THE INDONESIAN COAL REFERENCE PRICE HAS JUMPED 8.69 PERCENT IN JANUARY 2011
COALspot.com - Indonesia’s Ministry of Energy and Mineral Resources has set the January 2011 Indonesian Coal Reference Price for thermal ...
Saturday, 08 January 11
SUPRAMAX VESSELS WERE FIXED AT AROUND $ 9000 PD FOR A TRIP VIA INDONESIA TO INDIA - VISTAAR
COALspot.com - The holiday season affect combined with severe flooding in Queensland ports continues to keep the market and pressure. “Suprama ...
Saturday, 08 January 11
DIFFICULT YEAR FOR SHIPPING - TRANSPORT WEEKLY
Transport Weekly reported that, Shipping Corporation of India (SCI) chairman Sabyasachi Hajara says 2011 will be a difficult year because an excess ...
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- Ministry of Transport, Egypt
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- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
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- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
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- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Parliament of New Zealand
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- Power Finance Corporation Ltd., India
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- Petron Corporation, Philippines
- Planning Commission, India
- The Treasury - Australian Government
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
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- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Economic Council, Georgia
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- Parry Sugars Refinery, India
- Interocean Group of Companies - India
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- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
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- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- The University of Queensland
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Australian Coal Association
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- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
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- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
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- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
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