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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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Saturday, 06 June 09
COAL PRICE HIT RECORD ON STRONG CHINA DEMAND - INVESTMENT WATCH
Investment watch reported that, “Coal price hit a new high of over $72 a tonne at Australia’s Newcastle Port, a benchmark for Asia, spur ...
Friday, 05 June 09
CEMENT INDUSTRY NEEDS POLICY ON FLY ASH
H.M. Bangur, President of Cement Manufacturers' Association, on the objectives and economic impact of the proposed national policy on utilisation o ...
Thursday, 04 June 09
PAKISTAN TO IMPORT MORE COAL FROM INDONESIA - SEATRADE
COALspot.com (Pakistan): Richards bay to Pakistan sea freight has touched US$ 20.00 for 40,000/10 pct steam size in June 2009. South African c ...
Thursday, 04 June 09
CHINA'S SHANXI PROVINCE CONSIDERS COAL FUTURES BOURSE - MINE WEB
Mine Web reported that, China hopes to establish a coal futures exchange to obtain more rights on international pricing.
China's largest coal pr ...
Thursday, 04 June 09
CHINA QINHUANGDAO COAL STOCK JUMPS BY 36.2% MOM - STEELGURU
SteelGuru reported that, Sources indicated that, coal stock at Qinhuangdao port, China's major coal port has reached 4.88 million tonnes increasing ...
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- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Parliament of New Zealand
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- The University of Queensland
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
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