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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, 18 September 09
STANCHART TO ADVISE BAYAN ON INDONESIA COAL FINANCING
Indonesian coal miner PT Bayan Resources Tbk said on Wednesday it has appointed Standard Chartered Bank as a financial adviser for raising at least ...
Friday, 18 September 09
COKING COAL SUPPLY TO FALL 3 MILLION TONS IN CHINA ON SHUTDOWN
Bloomberg reported that, Coking coal supply in China, the largest consumer, may fall by 3 million metric tons a month after a mine accident this mon ...
Thursday, 17 September 09
FOUR LEFT IN INDIA'S MMTC COAL IMPORT TENDER-SOURCE
Reuters reported that, India's MMTC Ltd has accepted four out of five submissions for an import tender for 12.5 million tonnes of coal, with a bid ...
Thursday, 17 September 09
INDIA SEEKS COAL
IBT commodities reported that, India is on a coal buying spree. The big Asian nation is scrambling to cover an expected shortfall in domestic supply ...
Wednesday, 16 September 09
S. LANKA, INDIA'S NTPC TO SIGN $500 MLN COAL DEAL
Reuters reported that, Sri Lanka is to sign a commercial agreement with India's National Thermal Power Corporation (NTPC.BO) to build a $500 millio ...
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- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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