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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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Thursday, 22 April 10
INDONESIAN COAL PRICE REFERENCE FOR MARCH 2010 - US$ 86.64/T
COALspot.com: The directorate general of mineral, coal and geothermal of Indonesia has begun publishing a monthly coal price reference (HBA) to be use ...
Thursday, 22 April 10
NEED TO IMPORT 82 MT COAL IN FISCAL - INDIA COAL MIN
Indian Express reported that, anxious to bridge the ever-widening gap between the rising demand for coal and its inadequate supply, the Coal Ministr ...
Thursday, 22 April 10
DRY CARGO DEMAND EXPECTED TO INCREASE, FAVORING HIGHER FREIGHT RATES
Increased dry bulk cargo demand is expected to become the norm in the coming weeks and months, according to analysts, which in turn should sustain f ...
Thursday, 22 April 10
INDIA'S BORL SEEKS TO BUY INDONESIAS LOW - SULFUR COAL
COALspot.com: Bharat Oman Refineries Ltd, a joint venture company (promoted by Bharat Petroleum Corporation Ltd, India and Oman Oil Company Lt ...
Wednesday, 21 April 10
INDONESIA SHIPPED 13.24 PERCENT MORE COAL IN MARCH THAN A MONTH EARLIER
COALspot.com: Indonesia, the world largest coal exporter, shipped 27,615,191 MT of coal in March 2010, compare to 24.38 million tons in January and ...
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- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Australian Coal Association
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- PTC India Limited - India
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Planning Commission, India
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- The University of Queensland
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
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