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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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Friday, 19 March 10
COAL INDIA TO HIT CAPITAL MARKETS IN JULY
India’s largest coal producer, Coal India Ltd (CIL), expects to hit the capital markets by July, company chairman Partha S. Bhattacharyya said ...
Thursday, 18 March 10
COAL IMPORTS SOAR IN NANTONG PORT OF JIANGSU PROVINCE CHINA
BloombergUTV reported that, Coal imports at Nantong Port, located in coastal China's Jiangsu Province, soared 13 times to 581,000 tonnes in the fir ...
Thursday, 18 March 10
INNER MONGOLIA TO CAP COAL OUTPUT AT 700 MLN TONS IN 2010
Alibaba / China Knowledge reported that, Inner Mongolia, China's northern border autonomous region, plans to control coal output at 700 million ton ...
Thursday, 18 March 10
THE INDIAN MARKET WAS QUIET, BUT BECAUSE OF THE TIGHT TONNAGE SITUATION STILL FIRM - FEARNLEYS AS
Handy
Activity continues to be solid in the Atlantic.
Supramax physical market is strong which pushed the BSI to a 17 month high at ...
Thursday, 18 March 10
INDONESIAN COAL PRODUCTION EXPECTED TO BEAT EARLIER FORECAST
The Jakarta Globe reported that, the government expects coal output this year to exceed its initial projection of 250 million metric tons as the dri ...
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- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Posco Energy - South Korea
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
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