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