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