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