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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, 23 June 09
NAPOCOR TO RE-TENDER FOR 195,000 T COAL IN JULY
Electricity producer National Power Corp. (Napocor) will hold a tender on July 15 to buy 195,000 tons of steam coal for its Sual power station, the ...
Monday, 22 June 09
ONE DIES IN KUTAI COAL TUNNEL COLLAPSE
The Jakarta Post reported that, A tunnel at a coal mine belonging to company PT Fajar Bumi Sakti in Kutai Kartanegara, East Kalimantan collapsed on ...
Monday, 22 June 09
THIS WEEK IS EXPECTED TO BE FIRM AND DEMAND OF SHIPS WOULD BE STRONG - VISTAAR SINGAPORE
COALspot.com (Singapore): The BDI up by 487 points over last week which is an increase of almost 13 pct. The increase is again mainly due to Ca ...
Monday, 22 June 09
CHINESE MAY COAL IMPORTS HIT RECORD 9.43 MILLION TONNES
Reuters quoted Custom Data showed that China's coal imports hit an all-time record of 9.43 million tonnes in May.
The figure surpasses the previ ...
Monday, 22 June 09
SOUTH AFRICAN EXPORT COAL DECLINES ON WEAKENING EUROPEAN DEMAND
Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the fuel, posted the first dro ...
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- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- The University of Queensland
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- New Zealand Coal & Carbon
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Ministry of Mines - Canada
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