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