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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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- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Sical Logistics Limited - India
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- London Commodity Brokers - England
- White Energy Company Limited
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
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