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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
COAL INDIA, SHIPPING CORP MAY FORM VENTURE TO IMPORT COAL
The venture may be on the lines of the firm that CIL plans with SAIL for coal imports in which both to hold 25%
Live Mint reported that, State-ru ...
Tuesday, 06 October 09
ASIA COAL-PRICE REBOUND TOWARDS $71 ON TENDER ACTIVITY
Reuters reported that, Prices of power-station coal in Australia, a benchmark for Asia, rose 4 percent in the latest week to near $71 a tonne, bolst ...
Tuesday, 06 October 09
BHARATHI CEMENT TO ADD 2.5 MT CAPACITY BY 2010
Business-Standard reported that, Bharathi Cement Corporation (BCC) commenced its commercial operations from its Nallalingayapalli manufacturing plan ...
Tuesday, 06 October 09
MOZAMBIQUE TO BUILD COAL RAILWAY
BBC reported that, Mozambique's government has announced that it has secured $500m (£313m) to build a new railway line. The transport ministe ...
Tuesday, 06 October 09
COAL INDIA AIMS TO BUY MINE ABROAD BY MARCH
*Coal India to issue its first coal import tender by Nov
*ArcelorMittal, 9 others in race to develop abandoned mines
*52 firms keen to partner coa ...
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- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Economic Council, Georgia
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- VISA Power Limited - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
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