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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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Wednesday, 07 October 09
WORLD'S LEADING COAL-BASED PP PROJECT TO BEGIN TRIAL PRODUCTION NEXT YEAR IN NW CHINA
Xinhua Net reported that, a coal-based polypropylene (PP) production project in northwest China, believed to be the world's largest one, is to ...
Wednesday, 07 October 09
INDIA SAIL TO IMPORT 10-11 MLN T COAL IN FY10 - EXEC
Reuters reported that, Steel Authority of India Ltd plans to import 10-11 million tonnes of coal in the current year to March, below last year's 13 ...
Wednesday, 07 October 09
DOMESTIC SHIPPING FIRMS READY FOR NEW RULES ON COAL, INDUSTRY GROUP SAYS
The Jakarta Globe reported that, The domestic coal-shipping sector is ready for the introduction of shipping regulations requiring all power station ...
Wednesday, 07 October 09
CHINESE BANK MAY PULL OUT OF SUMATRA COAL RAILWAY
The Jakarta Globe reported that, The Export-Import Bank of China may pull out of a $1.28 billion South Sumatra coal-railway project with state-owned ...
Wednesday, 07 October 09
COAL INDIA LOOKS AT LONG-TERM PRICE CONTRACTS
Economic Times reported that, Coal India is looking at long-term price contracts, of at least three-four year periods, with foreign entities, 54 of ...
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- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- The University of Queensland
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Central Java Power - Indonesia
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- White Energy Company Limited
- Deloitte Consulting - India
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
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