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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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- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- White Energy Company Limited
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
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