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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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Saturday, 09 January 10
IMPORTED, LOCAL COAL TO BE MIXED IN POWER DRIVE
The government is likely to create a pool price of coal, wherein imported coal and Indian coal could be mixed, making the imported coal becomes more ...
Friday, 08 January 10
SA COAL PRICES TO SPIKE ON RESUMED INDIA BUYING
South African coal prices are set for another price surge to over $100 a ton FOB as Indian and Chinese buyers compete for limited prompt supply, pro ...
Friday, 08 January 10
COLOMBIAN COAL STARTS TO MOVE TO CHINA - TRADERS
* Producer sells cape cargo Colombian coal to China
* Firm bids in freight market
* More shipments expected
Colombian coal is starting to move ...
Thursday, 07 January 10
PT. BUKIT ASAM TO BUILD NEW COAL LOADING TERMINAL AND COAL LOADER
COALspot.com (Indonesia): PT Bukit Asam (Persero) Tbk, Indonesia’s state owned coal mining company, is planning to build an additi ...
Thursday, 07 January 10
RAMKY PLANS COAL MINING IN INDONESIA
Ramky Infrastructure Limited, a Hyderabad-based integrated infrastructure construction and development management company with strategic emphasis on ...
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- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
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- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
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- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
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- India Bulls Power Limited - India
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- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
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- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- The University of Queensland
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
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