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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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Thursday, 28 January 10
COAL - VIETNAM / TRADE
Vietnam expects to turn into a coal importer within three years, spurred by an industrial boom and rising power consumption, a senior executive with ...
Thursday, 28 January 10
JAPAN STEELMAKERS OPPOSE QUARTERLY COAL CONTRACTS
Japanese steelmakers oppose miner BHP Billiton's attempt to switch to quarterly contracts from annual deals for supplying coal, as the change would ...
Thursday, 28 January 10
BHP MAY SELL 25% STAKE IN INDONESIAN COAL PROJECT
BHP Billiton Ltd. plans to sell only a 25 percent stake in a coal project in Indonesia as it wants to retain control of the asset, said Indra Dianna ...
Thursday, 28 January 10
TRANSNET ASPIRES TO 81MT/Y COAL EXPORT CAPACITY
South African State-owned rail transport enterprise Transnet wants to increase coal-line rail capacity to 81-million tons a year as part of its Quan ...
Wednesday, 27 January 10
ASIA'S 2010 STEAM COAL IMPORTS TO REACH 460 MLN T
* China to import up to 100 mln T of steam coal in 2010
* China, India seen investing in southern Africa assets
Asian imports of steam coal will ...
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- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- PTC India Limited - India
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- GMR Energy Limited - India
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