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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, 14 September 09
BOOM FORECAST FOR COAL OUTPUT
SMH.com reported that, A COAL investment boom is driving Australian production to new peaks even as our biggest export markets shift towards cleaner ...
Sunday, 13 September 09
COAL INDIA MAY ACQUIRE ASSETS OF RIO TINTO
Coal India’s plan to acquire overseas mining assets is gathering steam. After a breakthrough in Mozambique, the coal behemoth has received&nbs ...
Saturday, 12 September 09
THE INDIA / FAR EAST SEEMS WILL CONTINUE TO BE SOFT UNTIL THE IRON ORE MOVEMENTS PICKS UP - CAPT. REDDY
COALspot.com (Singapore): The dry bulk market continued to be stable at almost as same levels as last week and the BDI was at 2,468 points.
...
Saturday, 12 September 09
GOVT REQUESTS MORE TIME TO ACQUIRE 21% SHARES IN NNT
The Jakarta Post reported that, the government plans to request a postponement for the acquisition of 21 percent shares in PT Newmont Nusa Tenggara ...
Saturday, 12 September 09
INDONESIAN CO KEEN ON TRADING COAL FOR EQUITY IN POWER PROJECTS
Though most large power project promoters have their own mines in Indonesia, MEC is confident of convincing Indian companies as its price is quite a ...
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- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
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