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