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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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Friday, 06 August 10
KRISHNAPATNAM PORT WINS NON MAJOR PORT AWARD 2ND TIME IN A ROW
COAlspot.com ( Press Release) Krishnapatnam Port, the world-class port on the Indian horizon, took the top honors for the second time in a row, in t ...
Friday, 06 August 10
POLANDS KOPEX GROUP DEVELOPS COAL MINE IN INDONESIA
Polishmarket reported that, Polish mining concern Kopex Group, , is to build the first in Indonesia mechanised underground coal mine. The group is c ...
Thursday, 05 August 10
MORATORIUM MAY HURT NEW PROJECTS: MINING GROUP
The government’s proposed two-year moratorium on issuing new concessions to convert forests and peatlands to other uses may hinder new mining ...
Thursday, 05 August 10
IRON ORE EXPORT BAN COMPOUNDS PROBLEMS OF INDUSTRY - BUSINESS STANDARD
Forex loss of Rs 300 crore (US$ 65.63 million) ; truckers, ports, Railways bear the brunt
The Karnataka government’s move to ban the export ...
Thursday, 05 August 10
DRY BULK LOOKING TO CHINA FOR A NEW RALLY, BUT INDIA COULD BE THIS YEAR'S SURPRISE
The dry bulk market’s rebound has hit a “wall” this week, with the industry’s benchmark, the BDI (Baltic Dry Index) ending i ...
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- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Planning Commission, India
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
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