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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, 23 December 10
SOUTHGOBI RESOURCES CLOSES STRATEGIC INVESTMENT IN ASPIRE MINING LIMITED
Press Release – SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878), announced today that it has completed the private placement with Aspire Mining ...
Thursday, 23 December 10
CESC EYES COAL MINES IN INDONESIA, S AFRICA - TEHELKA
Company has already set a target of adding 6,000 MW power generation by the end of the 12th Plan in 2017
Tehelka reported that, CESC Ltd, the fla ...
Thursday, 23 December 10
SANTA CLAUSE DID NOT COME EARLY THIS YEAR - FEARNBULK
Handy
Not much fresh enquiry this week and quite dead in Bl.Sea/Med. Nevertheless ...
Thursday, 23 December 10
STERLITE ENERGY LIMITED TO BUY 0.6 MLN MT OF COAL FOR 2011
COALspot.com - Sterlite Energy Limited (SEL) is a part of Vedanta Resources plc , a London listed FTSE 100 diversified metals and mining major with ...
Wednesday, 22 December 10
PEABODY ENERGY TO SOURCE INDONESIAN COAL FROM PT SUPRA BARA ENERGI (SBE) - COAL GEOLOGY
Coal Geology reported that, Peabody Energy has entered into an agreement to source coal from PT Supra Bara Energi (SBE), which will be sold on the e ...
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- Madhucon Powers Ltd - India
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- Goldman Sachs - Singapore
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- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
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- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
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- Directorate General of MIneral and Coal - Indonesia
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- Chamber of Mines of South Africa
- Romanian Commodities Exchange
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- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
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- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
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- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
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- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
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- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
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- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Central Java Power - Indonesia
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- Formosa Plastics Group - Taiwan
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- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
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- Economic Council, Georgia
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- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
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- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
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- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Standard Chartered Bank - UAE
- PTC India Limited - India
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
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