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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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Monday, 28 June 10
MEC TO INK COAL-EQUITY SWAP DEALS WITH POWER PROJECTS
Business Line reported that, First it was power producers moving to pick up stakes in coal mining projects to ensure the raw material supplies.
N ...
Monday, 28 June 10
COLOMBIA WILL LIKELY EXPORT 80 MILLION TONNES OF COAL IN 2010
Best Colombia reported that, Mr Hernan Martinez energy and mines minister of Colombia told reporters that Colombia will likely export 80 million ton ...
Monday, 28 June 10
WESFARMERS' SEPT QTR COAL PRICE UP 11% - SMH
SMH reported that, Wesfarmers Ltd says it expects a 11 per cent increase in prices for metallurgical coal from its Curragh mine in Queensland in the ...
Saturday, 26 June 10
THE SUPRAMAX INDEX FOR S6 ROUTE WAS UP BY US$ 1091 PER DAY OR 5.7 PERCENT D-O-D -- VISTAAR
COALspot.com: The market appears to be steadying with all indices almost stabilizing and the drop much less than last two weeks.
The BDI softened ...
Saturday, 26 June 10
MONGOLIA COAL RAILWAY TO LINK WITH RUSSIA - BUSINESS WEEK
Business Week reported that, Mongolian lawmakers have approved plans for a rail line linking with Russia to help tap large coal deposits in the sout ...
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- Central Electricity Authority - India
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Australian Coal Association
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
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