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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, 26 April 10
COAL INDIA NEARS PORT DEAL WITH VIZAG STEEL - DNA
DNA India reported that, Coal India Ltd (CIL), the country’s largest coal producer, is close to signing a deal to acquire space at Vizag Steel ...
Sunday, 25 April 10
THE WAITING AT INDIAN PORTS FOR COAL VESSELS WAS QUITE NORMAL - VISTAAR
COALspot.com: The BDI remained unchanged this week and all other sectors also the change was not much.
The cape index continued to move up and wa ...
Saturday, 24 April 10
NTPC TO BUY COAL MINES IN KAZAKHSTAN - TELEGRAPH INDIA
Telegraph India reported that, NTPC Ltd plans to acquire coal mines and operate two thermal power plants in Kazakhstan.
“We are exploring t ...
Saturday, 24 April 10
CHINA'S COAL IMPORTS DOUBLE IN MARCH
China's General Administration of Customs said that the country imported 15.22 million tons of coal last month, more than double the amount it impo ...
Friday, 23 April 10
KPCL EYES MINE IN INDONESIA - BUSINESS STANDARD
Business-Standard reported that, Karnataka Power Corporation Ltd (KPCL), the state-owned power generator, is exploring the possibility of acquiring ...
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- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Economic Council, Georgia
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Thiess Contractors Indonesia
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
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