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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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Saturday, 07 November 09
THE STEAM COAL MOVEMENT FROM INDONESIA TO INDIA REMAINED QUITE STRONG - CAPT. REDDY
COALspot.com (Singapore): The BDI continued rising this week and was up by 290 points up by almost 9 pct and the index closed at 3,393 points.
B ...
Friday, 06 November 09
COAL INDIA ABANDONS PLAN TO BUY ASSET IN AUSTRALIA
Coal India’s efforts to acquire a mid-sized virgin thermal coal block from a private party in Australia have drawn a blank.
The effort was ...
Friday, 06 November 09
NEW ASSETS WILL INCREASE COKING AND THERMAL COAL PRODUCTION
Coal and metals processing company Coal of Africa Limited (CoAL) aims to produce 10-million tons a year of coking coal and two-million tons a year o ...
Friday, 06 November 09
NTPC TO APPOINT MERCHANT BANKER FOR S AFRICA COAL MINE
State-run power producer NTPC, which is eyeing coal mines in South Africa to meet the gap in domestic fuel supply, will appoint a merchant banker ne ...
Thursday, 05 November 09
MERCATOR LINES AIMS TO BECOME A $5 BILLION COMPANY
Mercator Lines, India’s second largest private sector shipping line, plans to invest and expand, riding India’s next wave of growth, the ...
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- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- PTC India Limited - India
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- The University of Queensland
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- MS Steel International - UAE
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
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