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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, 16 December 09
COAL MARKETS 2010 CONFERENCE - PRESS RELEASE
COALspot.com (Singapore) Press Release – Back for the 8th year, Coal Markets 2010 will be taking place in Singapore on 28 – 29 Jan ...
Wednesday, 16 December 09
CHINA 2010 COAL TERM PRICES SEEN RISING 8% ON YEAR
Term prices of thermal coal for 2010 in China are expected to rise about 8 percent from this year's levels, as demand for power has been roaring ba ...
Wednesday, 16 December 09
KANGAROO RESOURCES TO ACQUIRE INDONESIAN COAL INTERESTS
Emerging coal producer Kangaroo Resources has significantly enhanced its production pipeline in Indonesia after reaching agreement to acquire a coki ...
Wednesday, 16 December 09
UAE'S RAS AL KHAIMAH TO INVEST $5.2B IN EAST KALIMANTAN PROJECT
Shrugging off neighbor Dubai’s debt problems, the smaller United Arab Emirate of Ras Al Khaimah announced on Tuesday that it would increase it ...
Wednesday, 16 December 09
COECLERICI EYES SECOND RUSSIA COAL MINE
* CEO says "seriously considering" mid-small size purchase
* Will use mine to increase exports to Asia
* Says delays at ports will not c ...
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- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- Planning Commission, India
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
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