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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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Monday, 08 February 10
BLACK RIDGE MINING APPOINTS INDEPENDENT CONSULTANT
Australian-listed Black Ridge Mining has announced the appointment of David Tuit as an independent consultant to assist with the assessment of the c ...
Monday, 08 February 10
SOUTH AFRICAN EXPORT COAL RISES FOR FIRST TIME IN FOUR WEEKS
Prices for coal shipped from South Africa’s Richards Bay, the continent’s biggest export facility for the fuel, posted their first gain ...
Monday, 08 February 10
NTPC HOPES TO START ON 500-MW PROJECT IN SRI LANKA BY FEB-END
NTPC sources told Business Standard, “All formalities from our government and NTPC have been completed.
The opinion of the Sri Lankan atto ...
Sunday, 07 February 10
AN AUSTRALIAN FIRM HAS SIGNED A $60BN DEAL TO SUPPLY COAL TO CHINESE POWER STATIONS
Clive Palmer, chairman of the company, Resourcehouse, said it was Australia's "biggest ever export contract".
Under the deal, the firm ...
Saturday, 06 February 10
FREIGHT WOULD CONTINUE TO BE SOFT NEXT WEEK - VISTAAR SHIPPING
COALspot.com (Singapore): The freight market continued to soften this week including the stock markets. The main reason seems to be Chinese ne ...
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- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Minerals Council of Australia
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
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