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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, 04 January 10
TOKYO ELECTRIC SEALS XSTRATA COAL DEAL
Tokyo Electric Power Co has agreed to pay about $US85 a tonne for Australian thermal coal in 2010 from miner Xstrata, a source familiar with the pri ...
Monday, 04 January 10
IND-BARATH TO SHIFT PROJECT FROM AP TO TN
Hyderabad-based power producer Ind–Barath is planning to set up a power plant at Tuticorin, Tamil Nadu. The proposed project would attract inv ...
Sunday, 03 January 10
NEWCASTLE THERMAL COAL PRICES FALL IN FIRST DECLINE IN 3 WEEKS
Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, declined 1.5 percent, falling for the first time in three weeks ...
Sunday, 03 January 10
NTPC SEEKS REPORT ON TRANSPORTING COAL THROUGH WATERWAYS
State-run National Thermal Power Corporation (NTPC), the country’s largest power utility, has asked for a “holistic” feasibility r ...
Sunday, 03 January 10
BHP TO STAY IN MARUWAI AND TO KEEP 75 PERCENT OF THE STAKE
Despite recent statements that it would pull out completely from Indonesia, the world's largest mining company BHP Billiton has now admitted that i ...
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- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Marubeni Corporation - India
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
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