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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, 23 October 09
AUSTRALIA APPROVES CHINESE TAKEOVER OF FELIX RESOURCES
* Australia give conditional approval to China's Felix deal
* Chinese owner must list the assets on Australian exchange
Reuters reported that, ...
Friday, 23 October 09
IVANHOE TARGETING 20 MILLION TONS OF COAL OUTPUT IN MONGOLIA
Bloomberg reported that, Ivanhoe Mines Ltd., developing a $4 billion copper and gold mine in Mongolia with Rio Tinto Group, is targeting long-term c ...
Friday, 23 October 09
XSTRATA PLANS $1BN AUSTRALIAN COAL PORT
Xstrata Plc, the world's biggest exporter of steam coal, plans to build a new $1 billion coal port in Australia, it said.
The proposed Balaclava ...
Friday, 23 October 09
MEXICO'S CFE SEEKS 6.24 MLN T COAL FOR 2010-12
Reuters reported that, Mexico's state-owned power monopoly plans to award a tender for 6.24 million tonnes of steam coal in December, according to ...
Friday, 23 October 09
CIL PRICE HIKE LIKELY TO PUSH POWER RATES UP
Business-Standard reported that, May squeeze cement companies’ margins, but the steel sector is unlikely to be affected much.
The upward re ...
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- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Marubeni Corporation - India
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- The University of Queensland
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
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