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