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