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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, 26 June 09
BAYAN TARGETS GROSS PROFIT TO RISE BY 86.2 PERCENT
Local coal producer publicly listed PT Bayan Resources is targeting this year's gross profit to rise by 86.2 percent on the back of higher sales vo ...
Thursday, 25 June 09
INDIA'S ULTRATECH BUYS 500,000T S.AFRICA COAL
Indian cement maker Ultratech has bought 10 handymax cargoes of South African coal at $73.00-$74.00 a tonne CIF for July-September delivery, Indian ...
Wednesday, 24 June 09
NTPC BURNS MORE COAL TO PRODUCE ELECTRICITY
A tonne of coal is the same as another tonne of coal, you might think.
But power major NTPC Ltd is finding that this year’s coal is not yie ...
Wednesday, 24 June 09
NTPC, COAL INDIA TO BUY MINING ASSETS OVERSEAS
State-owned utility National Thermal Power Corporation (NTPC) and the largest coal producer Coal India are in advanced stages of acquiring mining as ...
Tuesday, 23 June 09
NEWCASTLE WEEKLY COAL EXPORTS DECREASE 15%; SHIP QUEUE RISES
Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, fell 15 percent last week while the numb ...
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- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Agrawal Coal Company - India
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- The University of Queensland
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- London Commodity Brokers - England
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
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