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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, 20 September 10
MMTC SEEKS TO BUY 1.3 MT OF COAL FOR INDIA UTILITIES - SXCOAL
MMTC Ltd., India’s largest state- owned trading company, is seeking bids for the supply of 1.3 million tonnes of coal to feed power plants run ...
Monday, 20 September 10
KANGAROO RESOURCES SIGNS PARTNERSHIP WITH ASEAMCO FOR INDONESIAN COAL ASSETS - PROACTIVE INVESTORS
International coal producer Kangaroo Resources (ASX: KRL) has completed a new three-year agreement with Australian mining consultants ASEAMCO to del ...
Monday, 20 September 10
ICVL LOOKS FOR COAL ASSETS IN UZBEK, INDONESIA, AUSTRALIA - ECONOMIC TIMES
Economic Times reported that, International Coal Ventures, or ICVL, the special purpose vehicle floated by five state-owned firms to scout for coal ...
Monday, 20 September 10
IRON-ORE SHIPPING DEMAND MAY GAIN ONCE CHINA STEEL CUTS FINISH, SSY SAYS
Demand to transport iron ore may rebound once China ends steel-production cuts and steel prices may gain in the next several months because of the r ...
Saturday, 18 September 10
ECI / CHINA FREIGHT ROUTE DOWN BY 1.22 PCT OR US$ 225 PER DAY AND CLOSED AT US$ 18,123 PER DAY - VISTAAR
COALspot.com: The BDI was under pressure this week and was almost down by 11 pct and closed at 2676 points.
The Cape and Panamax index was almost ...
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- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
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- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Planning Commission, India
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Australian Coal Association
- Videocon Industries ltd - India
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Indogreen Group - Indonesia
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