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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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Tuesday, 01 June 10
LANCO INFRATECH PLANS POWER PROJECTS IN COASTAL REGIONS
My digital reported that, Hyderabad-based Lanco Infratech will set up power projects in coastal regions based on imported coal. The company is ...
Monday, 31 May 10
NEWCASTLE WEEKLY EXPORTS RISE; SHIP QUEUE SHORTENS
Business week reported that, Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel used in powe ...
Saturday, 29 May 10
FREIGHT MARKET SEEMS TO BE STABILIZING - CAPT. REDDY
COALspot.com: The week was clearly for Cape which went up by almost 21 pct . The BDI was up only by 6 pct.
The other sectors were under pressure ...
Friday, 28 May 10
BERAU COAL GROUP SEEKS US$ 700 M LOAN
PT Bukit Mutiara has decided to revise down its bond issue from US$600 million to US$400 million. In total, it is seeking US$700 million of debt, co ...
Friday, 28 May 10
CHINESE BAN TO HIT INDIAN IRON ORE EXPORTS
Nearly half of India's iron ore exports to China are in serious danger of being wiped out. The local government has imposed a ban on import of low ...
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- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Minerals Council of Australia
- Deloitte Consulting - India
- Economic Council, Georgia
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
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