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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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Wednesday, 17 February 10
JORONG COULD COST BANPU 5%
Banpu Plc, Asean's biggest coal miner, forecasts a 5% drop in revenue if its suspended coal mine in Indonesia is closed for one year, says presiden ...
Wednesday, 17 February 10
RUSSIA KRU JAN COAL EXPORTS DOWN 4 PCT
Kuzbassrazrezugol, Russia's second largest steam coal producer, exported 1.859 million tonnes of coal last month, down 80,000 tonnes or 4 percent f ...
Wednesday, 17 February 10
VEDANTA SET FOR PORTS ENTRY WITH VIZAG TENDER
Vedanta, along with Leighton Contractors India, quoted a revenue share of 38.1% to win the 30-year contract
Mining and metals conglomerate Vedant ...
Tuesday, 16 February 10
TRENDS DRY BULK MARKET ... TRENDS - BRS
The start of the Chinese New Year had an immediate impact on rates and for once all the dry bulk segments lost similar ground.
The BDI fell 5%, a ...
Tuesday, 16 February 10
LAW POSES THREAT TO INDONESIA'S COAL INDUSTRY
A zoning law could cost coal miners billions of dollars this year alone, hurt investment in the industry and disrupt the supply of the fuel to the c ...
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- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
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