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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, 17 October 09
US COAL MINERS LOOKING AT LOWER PROFITS
Most US coal miners are looking at sharply lower third-quarter earnings, but those that produce coal for steelmaking and export should enjoy higher ...
Friday, 16 October 09
INDONESIA EXPORTED 19,194,857 MT OF COAL IN SEPTEMBER 2009 - SOURCES
COALspot.com (Indonesia): Indonesia exported 19,194,857 MT of coal in September 2009. Out of total exported quantity, South Korea imported abou ...
Friday, 16 October 09
NAVIGATING THROUGH STORMY WATERS
To Theodore E Veniamis, the President of the Union of Greek Shipowners, the current turmoil in world shipping is due to the cyclical nature of marit ...
Friday, 16 October 09
COAL INDIA RAISES PRICE BY 11%
Trak reported that, State-owned Coal India Ltd (CIL) has raised the price of coal produced by its subsidiaries by an average of 11 percent effective ...
Thursday, 15 October 09
SOUTH AFRICAN MINING COMPANY ACCEPTED $92 MILLION BID FOR COAL MINE STAKE IN SIYANDA COAL
Paguntaka reported that, Sentula Mining Ltd. gained in Johannesburg trading after the South African company accepted a 686 million-rand ($92 million ...
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- Economic Council, Georgia
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
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