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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, 28 September 09
TATA POWER SCOUTS FOR COAL BLOCKS ABROAD
Business Standard reported that, private power producer Tata Power is scouting for coal mines abroad, including Australia and Mozambique, to meet de ...
Saturday, 26 September 09
THE INDIA / FAR EAST SEEMS WILL BE FIRM NEXT WEEK - VISTAAR
COALspot.com (Singapore): The dry bulk market was soft this week and the BDI dropped by almost 7 pct to 2,183 points. The cape size index dropped by ...
Saturday, 26 September 09
GSECL PLANS TO PROCURE 15 LAKH (1.5 MILLION) MT OF IMPORTED COAL
Business Standard reported that, State-run power generation company, Gujarat State Electricity Corporation Ltd (GSECL) intends to procure 15 lakh (1 ...
Saturday, 26 September 09
SAIL TO SET UP TWO SLAG-BASED CEMENT MANUFACTURING UNITS
Rediff Business reported that, Government-owned Steel Authority of India Ltd, the country's largest steel producer, is looking to set up two greenf ...
Friday, 25 September 09
INDONESIA STOCK EXCHANGE EXAMINES BUMI DEAL WITH CHINESE SOVEREIGN WEALTH FUND
The Jakarta globe reported that, The Indonesia Stock Exchange is looking into the $1.9 billion financing deal between PT Bumi Resources, the country ...
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- Power Finance Corporation Ltd., India
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- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Parliament of New Zealand
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- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
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- Anglo American - United Kingdom
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- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
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- Petron Corporation, Philippines
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- Eastern Coal Council - USA
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- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
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- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
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- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
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