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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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Friday, 25 September 09
FREIGHT RATE CUTS MAKING SOUTH AFRICAN COAL MORE COMPETITIVE IN ASIAN MARKETS
Mining Weekly reported that, Coaltrans South Africa MD Gerard Strahan highlighted the country’s sudden increase in coal exports to southern Ch ...
Friday, 25 September 09
XSTRATA TO BUILD ITS OWN RAIL CAPACITY TO SHIP AUSTRALIAN COAL
Bloomberg reported that, Xstrata Plc, the world’s largest exporter of coal used by power stations, will establish its own rail haulage capacit ...
Thursday, 24 September 09
INDIA CEMENT CO'S TO AWARD 200,000T COAL TENDER
Reuters reported that, India's biggest cement maker ACC Cement Ltd and Gujarat Ambuja will award on Thursday Sept 25 a tender for 100,000 tonnes ea ...
Thursday, 24 September 09
YUDEAN TO SIGN CO-OPERATION LETTER OF INTENT WITH RUSSIA COAL TRADE COMPANY
In the recent days, Gao Shiqiang, deputy manager of Yudean Group Co., Ltd. went and carried out the friendly talks with SUEK and inked the trade co- ...
Thursday, 24 September 09
ANGLO EYES DOUBLED METALLURGICAL COAL OUTPUT BY 2018
Mining group Anglo American could double its production of coal used for steel making by 2018 if all of its unapproved projects went ahead, the comp ...
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- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- The University of Queensland
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- MS Steel International - UAE
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Planning Commission, India
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
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