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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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Sunday, 11 July 10
OVERALL NO OR NEGLIGIBLE IMPACT IN ARUTMIN MINE - BUMI
COALspot.com: Bumi denies the media reports on an impact of unusually rains on coal production in BUMI mines.
"Arutmin is being impacted by ...
Saturday, 10 July 10
FREIGHT MARKET SITUATION MAY CONTINUE FOR NEXT COUPLE OF WEEKS - VISTAAR
COALspot.com: The market continued to soften further with the cape and panamax index down by about 20 pct and closed at 2,102 and 1,944 points respe ...
Saturday, 10 July 10
STC OF INDIA TO ASSOCIATE WITH FUEL SUPPLIERS
COALspot.com: State Trading corporation of India, which is under Ministry of Commerce, has invited Expression of Interest from coal suppliers ...
Saturday, 10 July 10
SCOMI TO SELL STAKE IN INDONESIA OPS - THE STAR
The star online reported that, Scomi Marine Bhd will sell a stake in its marine logistics business in Indonesia to a large Indonesian company to dea ...
Thursday, 08 July 10
KPCL RECEIVES 8 QUALIFIED BIDS TO SUPPLY 500,000 MT OF COAL
COALspot.com: Indian state utility KARNATAKA POWER CORPORATION LIMITED has opened price bid yesterday.
According to a participant, the quo ...
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- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- The University of Queensland
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
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