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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, 16 July 10
CHINA EXPORTS 10.14 MILLION TONNES OF COAL IN H1 OF 2010
China exported 10.14 million tonnes of coal in the first half of this year, down 13.1% compared with the corresponding period of last year, accordin ...
Thursday, 15 July 10
SMC TO PURSUE MINDANAO COAL MINING PROJECTS
Philippine Daily Inquirer reported that, DIVERSIFYING CONGLOMERATE San Miguel Corp. is inclined to pursue its coal mining projects in Mindanao ...
Thursday, 15 July 10
ADANI ENTERPRISES WILL BUY $1 BILLION COAL MINE FROM LINC ENERGY - TOP NEWS
Top News reported that, Adani Enterprises has almost managed to obtain a coal mine from Linc Energy for $1 billion in Queensland, Australia. This mi ...
Thursday, 15 July 10
ADANI TO DEVELOP COAL EXPORT TERMINAL IN AUSTRALIA - BUSINESS STANDARD
Business-Standard reported that, The Adani Group, promoter of Mundra Port and Special Economic Zone (MPSEZ), today said it has been selected as the ...
Thursday, 15 July 10
NO IMPROVEMENT IN THE DRY BULK MARKET - INTERMODAL
Broker’s insight
With the Baltic Dry Index today (13/7/2010) standing at 1,790 points - the lowest point since early May 2009 - ...
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- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
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