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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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- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- The University of Queensland
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Australian Coal Association
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- White Energy Company Limited
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
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