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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, 10 February 10
ANGLO AMERICAN TIPS COAL PRICE RISE AFTER RAIN, AUSTRALIAN SAYS
Anglo American Plc expects coking coal contract prices to rise after weeks of heavy rain in Queensland state cut output by as much as 10 million met ...
Wednesday, 10 February 10
KANGAROO RESOURCES COMMENCES MINING AT MAMAHAK COKING COAL PROJECT
International coal producer Kangaroo Resources has kicked off mining at its second Indonesian coal operation, the Mamahak Coking Coal Project in Eas ...
Wednesday, 10 February 10
CHINA DENIES CLIVE PALMER'S COAL DEAL
ONE of China's biggest government-owned companies yesterday repudiated mining billionaire Clive Palmer for overstating what he said was Australia' ...
Tuesday, 09 February 10
INDIANS SAY SEEKING COAL BARGAINS VIA INDEX PRICES
* Indonesian cheaper than S.African - traders
* End-users wait for price falls before tendering
Indian coal traders responsible for the bulk of ...
Tuesday, 09 February 10
EURO COAL-PROMPT SLIDES WITH OIL PRICES
* April S.African cargo trades at $83.50/T FOB, unchanged
* April DES cargo trades at $74.75 a tonne, down $1/T
* Russia's Kuzbassrazrezugol sees ...
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- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Mercator Lines Limited - India
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- The University of Queensland
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Australian Coal Association
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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