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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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Monday, 05 October 09
SOUTH AFRICAN COAL RISES ON INDIAN BUYING, DOMESTIC DEMAND
Bloomberg reported that, Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the f ...
Monday, 05 October 09
BANPU EYES INCREASE IN COAL OUTPUT
The Nation reported that, Banpu plans to boost its coal output to 23 million tonnes next year once production begins at the East Block of its Indomi ...
Monday, 05 October 09
COAL TRADING C&O TO INVEST $100 M NEXT YEAR
The Jakarta Post reported that, Coal and Oil (C&0) Group of India plans to invest up to US$100 million in Indonesia next year to acquire coal mi ...
Sunday, 04 October 09
INDONESIAN COAL EXCHANGE FOR PRICE BENCHMARKING IN OFFING
Reuters cited Mr Bob Kamandanu chairman of the Indonesian Coal Producers Association as saying that Indonesia plans to set up a coal exchange to cre ...
Sunday, 04 October 09
GRASIM TO CONSOLIDATE CEMENT BIZ
The Statesman reported that, India's largest cement producer Aditya Birla group today said it would consolidate its cement businesses by merging Gr ...
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- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
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