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