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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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Saturday, 12 September 09
$1.5B KALIMANTAN COAL RAIL TENDER EXPECTED BY YEAR-END
The Jakarta Globe reported that, In the second announcement on major coal-railway projects in as many days, Central Kalimantan’s top official ...
Friday, 11 September 09
INDONESIA COAL-PRICES AT $66, SUPPLIERS OFFER AT BARGAIN PRICES
Some Indonesian producers were rushing to sell coal at bargain prices to ease excess stocks and catch shipments before the Muslim Eid Al-Fitr festiv ...
Friday, 11 September 09
ALPHA NATURAL EXPECTS HIGHER MET, STEAM COAL PRICES IN 2010
Mining Weekly reported that, There are encouraging signs that metallurgical coal demand in most key global markets is either returning or poised to ...
Friday, 11 September 09
POWER SECTOR'S DEPENDENCE ON COAL TO CONTINUE
The power sector will continue to be largely dependant on coal-based thermal power plants to meet its energy needs for the next 15-20 years, Power S ...
Friday, 11 September 09
L&T EYES AUSSIE COAL MINE
Commodity Online reported that, Larsen and Toubro is in talks to buy a thermal coal mine in Australia for about $300 million. Thermal coal is used f ...
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- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Planning Commission, India
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Australian Coal Association
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- White Energy Company Limited
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
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