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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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Friday, 04 December 09
CHINA'S COAL IMPORTS PREDICTED TO DECLINE IN 2010
China's eye-catching coal import figure s are unlikely to extend into 2010 given the predicted narrow-down of the coal price spread between the hom ...
Friday, 04 December 09
SUBHASH PROJECTS BEGINS MINING AT INDONESIAN COAL BLOCK
Kolkata-based infrastructure company Subhash Projects and Marketing (SPML) has begun mining at its coal block in Indonesia and will begin despatchin ...
Friday, 04 December 09
DRY BULK MARKET IS ON THE RISE AGAIN
Proving rather resilient, compared to previous behaviors, the dry bulk market has been on a rebound mode once again, after a two-week fall, which su ...
Friday, 04 December 09
INDONESIA'S BUMI EYES MARKETING DEAL FOR BERAU COAL
Reuters reported that, Indonesian coal miner PT Bumi Resources Tbk said on Thursday it is in talks to be the exclusive marketing agent for coal prod ...
Friday, 04 December 09
KALIMANTAN GOLD AGREES TO SELL IBP COAL CONCESSION
COALspot.com ( Press Release): Kalimantan Gold Corporation Limited ("KLG" or the "Company"), which undertook drilling and had an ...
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- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- McConnell Dowell - Australia
- Australian Coal Association
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Minerals Council of Australia
- VISA Power Limited - India
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- The University of Queensland
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
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