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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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Monday, 01 March 10
166 MINING COMPANIES THREATEN ENVIRONMENT
Viva News reported that, the Indonesian Forum for the Environment (Walhi) of East Kalimantan reveals that 166 coal mining companies, which are curre ...
Monday, 01 March 10
IRON ORE PRICE NEGOTIATIONS - 80PCT HIKE SEEN BY CHINESE
China Knowledge quoted an insider from a large Chinese steel company said there will be a significant increase in steel prices in the next few month ...
Sunday, 28 February 10
SUPRAMAX CHARTER RATES FOR ONE YEAR IS AROUND US$ 19,000/20,000 PER DAY - VISTAAR SINGAPORE
COALspot.com : The freight market firmed up by almost 10 pct on Supramax and Handy size and about 7 pct on Panamax.
However it was interesting to ...
Sunday, 28 February 10
MINISTRY SEEKS TWO YEAR DELAY TO IMPLEMENT ENVIRONMENT LAW
The Jakarta Post reported that, The ministry of energy and mineral resources has proposed that the government postpone the implementation of the 200 ...
Sunday, 28 February 10
CONTINENTAL TARGETS COAL SALES FROM S AFRICA MINE IN Q2 - MINING WEEKLY
Mining weekly reported that, Junior coal explorer Continental Coal would start coal sales from its Vlakvarkfontein mine, in South Africa, in the sec ...
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- Parliament of New Zealand
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
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