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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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Sunday, 14 March 10
CHINESE COAL PRICE MAY RISE TO TRADE NEAR SPOT, MACQUARIE SAYS
Bloomberg reported that, Steel mills in China, the world’s biggest producer of the alloy, may pay more for domestic coking coal this year as d ...
Sunday, 14 March 10
THERE IS NO INDICATION OF SLOWING DOWN OF IRON ORE AND COAL IMPORTS BY CHINA - VISTAAR SINGAPORE
COALspot.com: The dry bulk freight market continued the upward trend and the BDI closed 8.14 pct this week.
The Cape index up by 10.32 pct ...
Saturday, 13 March 10
INDONESIA COAL EXPORTS DROP IN FEBRUARY
COALspot.com: Indonesia, the world largest coal exporter, exported 24.38 million tons in January 2010 which fell slightly to 22.89 mln ton of coal i ...
Saturday, 13 March 10
INDONESIA TELLS BUKIT ASAM TO DITCH PARTNER IN SUMATRA RAILWAY UNLESS PROJECT STARTS
The Jakarta Globe reported that, the Indonesian government has urged state-owned miner PT Tambang Batubara Bukit Asam to look for new partners to he ...
Saturday, 13 March 10
OPTIMUM COAL AIMS TO RAISE R1,6 BILLION IN LISTING
All Africa reported that, COAL mining and exploration company Optimum Coal yesterday announced plans to list on the JSE at the end of the month ...
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- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- The Treasury - Australian Government
- The University of Queensland
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- CNBM International Corporation - China
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