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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, 14 January 10
INDIANS RESUME S. AFRICA COAL BUYING AGAINST INDEX - REUTERS
Indian trade buyers have resumed buying of South African prompt coal cargoes after a two-month hiatus but are opting for index-linked pricing, hopin ...
Wednesday, 13 January 10
STEAMING COAL SUPPLY SPOT CONTRACT FOR TAEAN POWER PLANT
COALspot.com (South Korea): Korea Western Power Co., Ltd is looking for total 1.12 million tons of Bituminous Coal for TAEAN Power Plant.
Accord ...
Wednesday, 13 January 10
INDONESIA ISSUES COAL, METAL DECREE
Indonesia has issued a ministerial decree which requires metal and coal miners to set aside a certain amount of their production for domestic needs, ...
Wednesday, 13 January 10
RESTING TIME FOR INDONESIAN COAL LOADING VESSELS
COALspot.com (Indonesia): 11 - 15 vessels are waiting in anchorages of Muara Berau and Tanjung Pemancingan to load total about 700,000 – ...
Wednesday, 13 January 10
SOUTH AFRICA STEAM COAL PRICE FALLS SHARPLY
Reuters reported that South African physical coal prices fell sharply on Tuesday with a March cargo trade at USD 87.5 a tonne FOB Richards Bay and d ...
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- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Australian Coal Association
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Economic Council, Georgia
- Deloitte Consulting - India
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
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