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