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