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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, 15 January 13
GRANT SMITH APPOINTED GROUP MANAGING DIRECTOR OF BRAEMAR ADJUSTING
The Board of Braemar Adjusting is delighted to announce the appointment of Grant Smith as Group Managing Director of the company with immediate effe ...
Tuesday, 15 January 13
2ND MYANMAR MINING SUMMIT & OFFICIAL HOST MINISTRY OF MINES TO WELCOME OVER 200 DELEGATES NEXT WEEK
Press Release: The Ministry of Mines is hosting the 2nd Myanmar Mining Summit in Yangon on 21-24 January to unravel the local mining climate, prospe ...
Monday, 14 January 13
NEWCASTLE PORT SHIPPED 2.32 PERCENT LESS COAL W/E 14 JANUARY 2013
COALspot.com - Newcastle port in Australia has loaded 3,123,312 MT of thermal and coking coal for week ended 0700 hours 14 January 2013, Newca ...
Monday, 14 January 13
THE COAL MONGOLIA - 2013 OFFICIALLY IN COOPERATION WITH TOP MINING COMPANIES
Press Release: Mongolian first mining portal site Mining.mn has already started its preparation of the International Conference “COAL MONGOLIA ...
Monday, 14 January 13
NTPC INVITES BIDS FOR 500K MT OF IMPORTED COAL
COALspot.com - NTPC Limited (formerly National Thermal Power Corporation) is the largest Indian state-owned electric utilities company called for a ...
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- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
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- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
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- VISA Power Limited - India
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
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- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
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- Rashtriya Ispat Nigam Limited - India
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- Semirara Mining and Power Corporation, Philippines
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- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
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- Kartika Selabumi Mining - Indonesia
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- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
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- Mercator Lines Limited - India
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- Planning Commission, India
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- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
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- Merrill Lynch Commodities Europe
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- Indogreen Group - Indonesia
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- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- CNBM International Corporation - China
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- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
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- Billiton Holdings Pty Ltd - Australia
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- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
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- Malabar Cements Ltd - India
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- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Australian Coal Association
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
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- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
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- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
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- Kohat Cement Company Ltd. - Pakistan
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- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- PTC India Limited - India
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- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Economic Council, Georgia
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- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
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- Baramulti Group, Indonesia
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- Ministry of Mines - Canada
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- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
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- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
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- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
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