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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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- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
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