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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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Monday, 23 May 11
BRMS IS TO START PRODUCTION FROM DAIRI PRIMA MINERALS
COALspot.com - The Presidential Decree No. 28 Year 2011 that allows conditional underground mining in the protected forest areas was issued on 19th ...
Sunday, 22 May 11
INDONESIA - INDIA IS LIKELY TO BE STEADY NEXT WEEK - VISTAAR SINGAPORE
COALspot.com - The freight market remained soft beginning of the week, however second half of the week was firm with BDI up by 3.29 pct and closed a ...
Saturday, 21 May 11
OWNERS PREFER TO DO INDO COAL OR NICKEL ORE TO CHINA RATHER THAN GOING TO INDIA - FEARNBULK
Handy
The Atlantic is marked by volatility and very positional, nevertheless USG,NCSA, Cont remain strong thanks to the petcoke, grains and scrap ...
Friday, 20 May 11
GOVT TOLD TO LIMIT COAL, GAS EXPORTS - THE JAKARTA POST
The Jakarta Post, a leading news paper in Indonesia, reported that, Amid soaring global oil prices, the government should limit exports of coal and ...
Thursday, 19 May 11
INDONESIAN COAL EXPORTS DROP 7.98 PERCENT IN APRIL
COALspot.com - Indonesian coal exports dropped to 2.168 million tons in April, and up 7.13 percent on the year and 7.98 percent below March, a ...
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- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- The University of Queensland
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
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