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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, 21 January 10
HANDYMAX - SHORT PERIOD OWNERS IDEAS ARE AROUND MID/LOW 20S - FEARNLEYS AS
HANDY
The BSI moved in a downward direction since last Friday reflecting minor a ...
Thursday, 21 January 10
ASF GROUP TO COMMENCE COAL SALES TO CHINA BY FEBRUARY 2010
Sydney-based China energy and resource conduit, ASF Group has struck an agreement to supply coal to China.
In September 2009, ASF announced a ven ...
Thursday, 21 January 10
INDONESIA BUKIT ASAM AGREES ON LOWER COAL PRICE
Indonesian state coal miner PT Tambang Batubara Bukit Asam Tbk has agreed with a local power plant to set 2010 coal prices at 23 percent lower than ...
Thursday, 21 January 10
CABOTAGE POLICY POSTPONED
The Transportation Ministry has decided to postpone for one year the full enforcement of the cabotage principle – a maritime term for the proh ...
Thursday, 21 January 10
MEC IN TALKS WITH TATA POWER ON COAL - TRADE
The UAE's Middle East Coal is in talks to supply coal to Tata Power, India's biggest private sector power firm, from its new Indonesian operations ...
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- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Minerals Council of Australia
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
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