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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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Tuesday, 20 October 09
COAL PRICES TO SURGE IN 2010 DESPITE AMPLE SUPPLY
Commodity Online reported that, Coal prices are indeed destined to go higher as they follow the rise of ‘coal currencies’ such as Austra ...
Tuesday, 20 October 09
INDIA MAY CUT STAKE IN NTPC BY DECEMBER, POWER SECRETARY SAYS
Bloomberg reported that, India’s government may sell a 5 percent stake in NTPC Ltd., the country’s biggest power producer, as early as D ...
Monday, 19 October 09
COAL PRICE UP AGAIN - RICHARDS BAY TERMINAL
Export prices rose 45 cents, or 0.7%, to an average of 64.05 a metric ton in the week ended Oct. 16, according to McCloskey Group.
The week was & ...
Monday, 19 October 09
COAL MINISTRY SEEKS EXPLANATION FROM AP GENCO
The Hindu Business reported that, the Coal Ministry has asked the Power Generation Corporation of Andhra Pradesh (AP Genco) to explain why there was ...
Monday, 19 October 09
CEMENT UNLIKELY TO COST MORE DESPITE COAL PRICE HIKE
Business-Standard reported that, Cement manufacturers will not immediately hike prices of the construction material, despite a surge in their input ...
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- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Minerals Council of Australia
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Planning Commission, India
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
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