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