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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, 07 December 09
CHINA COKING COAL PRICE MAY RISE 14% ON DEFICIT, CITIGROUP SAYS
Coking coal prices in China, the world’s biggest steel producer, may rise 14 percent next year because of a supply deficit, Citigroup Inc. sai ...
Monday, 07 December 09
JSW STEEL TO SELL MOZAMBIQUE COAL MINE FOR RS 300 CRORE
JSW Steel may sell its coal mine in Mozambique to sister company JSW Energy as the mine has become commercially unviable for the steel producer, a t ...
Monday, 07 December 09
BLACK RIDGE MINING ENTERS AGREEMENT WITH INDONESIAN COAL PRODUCER
Australian-listed Black Ridge Mining has entered into an exclusive dealing and non-circumvention agreement with Indonesian coal producer PT. Inmas A ...
Sunday, 06 December 09
THE ECI / CHINA (S7) ROUTE SOFTENED AND WAS AT US$ 25,275 PER DAY - VISTAAR
COALspot.com (Singapore): "The market was bit soft in the beginning of the week, however towards mid week that market started to pick up and th ...
Sunday, 06 December 09
NEW MANGALORE PORT GETS UPCL'S FIRST COAL PARCEL FROM INDONESIA
The Lanco Group-promoted Udupi Power Corporation Ltd (UPCL) has received the first parcel of imported coal from Indonesia at the New Mangalore Port. ...
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- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
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