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