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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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Thursday, 23 July 09
COAL IMPORTS SURGE; EXPORTS DOWN IN H1
China Trade Information reported that, China’s coal imports surged by 126.3 percent year-on-year in the first half of 2009, reaching 48.3 mill ...
Thursday, 23 July 09
SRI LANKA CALLS FOR COAL SUPPLY BIDS
Daily Mirro reported that, In a move to install the country’s first coal power plant, Sri Lanka has invited bids to supply 2.4 million metric ...
Thursday, 23 July 09
POWER INVESTORS TURN BACKS ON VIETNAMESE COAL IMPORTERS
VietNamNet Bridge reported that, Investors of power plants always seek foreign coal sources to import themselves, believing they can come by it chea ...
Wednesday, 22 July 09
BERAU COAL DRAWS LOCAL, CHINESE BIDS - SOURCES
* Indonesian coal firm draws local, Chinese bids-sources
* Deal could value Berau at more than $1 billion-sources
Reuters reported that, China' ...
Wednesday, 22 July 09
ONE TENDERS FOR 114,000 MT FOR NOV-JAN
Moroccan state-owned power utility Office National de l’Electricité (ONE) has launched a tender for three handymax shipments of coal fo ...
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- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- The University of Queensland
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
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