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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, 26 February 10
BANPU PROFITS SURGE BY 54% TO RECORD B14BN ON BRISK SALES
Banpu Plc, Asean's largest coal miner, said its earnings surged to a record high of 14.23 billion baht last year, an increase of 54% on the previou ...
Thursday, 25 February 10
INDO / INDIA COAL TRIPS SUPRAS CAN ACHIEVE AROUND MID 10S - FEARNLEYS AS
Handy
The BSI regained positive momentum exactly a week ago and the Atlantic rema ...
Thursday, 25 February 10
STEEP RISE IN COAL IMPORTS REQUIRED TO POWER INDIA - MONEYLIFE
The power ministry has estimated coal imports of 48 million tonnes in FY10-11, sharply higher than the expected imports of 28mt in the current fisca ...
Wednesday, 24 February 10
CHINA IMPORTED 8.81 MLN TONS OF INDONESIAN COAL IN JANUARY 2010
COALspot.com: Indonesia, the world largest coal exporter, exported 24.38 million tons of coal last month, compared with 27.46 million tons in a ...
Tuesday, 23 February 10
TRENDS..... DRY BULK MARKET .... TRENDS
The dry bulk market was pulled along by the Capes this week, as fresh enquiry breathed temporary life back into the market. Short period rates also ...
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- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- White Energy Company Limited
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- PTC India Limited - India
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- The University of Queensland
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
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