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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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Tuesday, 01 September 09
GLOBAL COAL PRICES UNDER PRESSURE AS CHINESE PROVINCE RETURNS TO THE PRODUCTION FRAY - REUTERS
China is set to return to role of coal exporter as the deadline for thousands of small coal mines in its Shanxi province to reopen after being shut ...
Tuesday, 01 September 09
INDONESIA PLN SECURES 1.9 MILLION TONNES COAL FOR NEW POWER PLANT
Reuters reported that Indonesia's state electricity firm PT Perusahaan Listrik Negara has secured 1.9 million tonnes of sub bituminous coal per yea ...
Tuesday, 01 September 09
EXPORT OF COAL RAW MATERIAL SHOULD BE REDUCED - INDONESIAN OFFICIAL
Antara reported that, Coal producing companies should reduce the volume of their export of coal raw material and increase the volume of their finish ...
Tuesday, 01 September 09
NEWCASTLE WEEKLY COAL EXPORTS RISE 23%, SHIP QUEUE DECREASES
Bloomberg reported that, Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, rose 23 percent ...
Monday, 31 August 09
INDIA MMTC ISSUE TENDER TO IMPORT 12.5 MMT COAL TO BE SUPPLIED OVER A PERIOD OF 12 MONTHS
COALspot.com (India): MMTC has re-issued a tender to import 12.50 Million Metric Tonnes (12.50 MMT) (+/- 2%) of thermal coal to be supplied over a p ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- Economic Council, Georgia
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- GMR Energy Limited - India
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
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