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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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Wednesday, 30 December 09
INDIA CEMENTS TO FINALIZE 3 SHIPMENTS OF SOUTH AFRICAN COAL NEXT WEEK
COALspot.com (India): India Cements is looking for 3 shipments (150,000MT) of South African coal for January – March 2010 delivery on C ...
Wednesday, 30 December 09
BANPU EXPECTS STABLE COAL PRICES
2009 revenue growth will be hard to beat
Banpu Plc, Asean's largest coal miner, expects coal prices to stay firm at about US$80 per tonne in the f ...
Wednesday, 30 December 09
CIL DELISTS JAGUAR ENERGY FOR KODA LINKS
Coal India Ltd (CIL) has dropped Indonesia-based Jaguar Energy & Power Ltd from the list of companies, it intended to forge partnerships with to ...
Wednesday, 30 December 09
COAL PRICE RISE REQUEST DENIED
A proposal by the Viet Nam National Coal and Mineral Industries Group to double the price of coal has been turned down by the Ministry of Industry a ...
Wednesday, 30 December 09
CHINA'S 2010 COAL DEMAND COULD RISE 4%-6%, ACCORDING TO CHINA SECURITIES JOURNAL
China, which is the world’s second-largest energy user, may consume between 4 and 6% more coal next year on continued economic growth, China S ...
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- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Parliament of New Zealand
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- The University of Queensland
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Economic Council, Georgia
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