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