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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, 07 August 09
COAL-PRICE FORECAST RAISED AT MERRILL ON CHINA, INDIA DEMAND
Bloomberg reported that, Bank of America Corp.’s Merrill Lynch & Co. unit increased its price forecast for Asian power-station coal becaus ...
Friday, 07 August 09
CHINESE DEMAND FOR FOREIGN COAL SOARS
Mining Weekly reported that, Chinese coal imports rocketed by 126,3%, year-on-year, in the first half of this year, the country’s customs auth ...
Thursday, 06 August 09
RICHARDS BAY COAL SHIPMENTS FELL 3% ON YEAR IN JULY
Bloomberg reported that, Richards Bay Coal Terminal, Africa’s largest coal-export facility, exported 3 percent less of the fuel in July than i ...
Thursday, 06 August 09
NTPC LOOKS TO BYPASS STATE TRADING FIRMS ON COAL IMPORT
A reduced coal import bill for NTPC could lead to lower power tariffs
Live mint.com reported that, India’s largest power generation utility ...
Thursday, 06 August 09
CHINA JULY COAL IMPORTS AT 9.5 MLN T, DEMAND FIRM
* Coal imports at key ports in July 2.8 times year-ago levels
* July coal imports down nearly 40 percent from June
* China still buying overseas c ...
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- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- The University of Queensland
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
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