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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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Thursday, 23 December 10
SOUTHGOBI RESOURCES CLOSES STRATEGIC INVESTMENT IN ASPIRE MINING LIMITED
Press Release – SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878), announced today that it has completed the private placement with Aspire Mining ...
Thursday, 23 December 10
CESC EYES COAL MINES IN INDONESIA, S AFRICA - TEHELKA
Company has already set a target of adding 6,000 MW power generation by the end of the 12th Plan in 2017
Tehelka reported that, CESC Ltd, the fla ...
Thursday, 23 December 10
SANTA CLAUSE DID NOT COME EARLY THIS YEAR - FEARNBULK
Handy
Not much fresh enquiry this week and quite dead in Bl.Sea/Med. Nevertheless ...
Thursday, 23 December 10
STERLITE ENERGY LIMITED TO BUY 0.6 MLN MT OF COAL FOR 2011
COALspot.com - Sterlite Energy Limited (SEL) is a part of Vedanta Resources plc , a London listed FTSE 100 diversified metals and mining major with ...
Wednesday, 22 December 10
PEABODY ENERGY TO SOURCE INDONESIAN COAL FROM PT SUPRA BARA ENERGI (SBE) - COAL GEOLOGY
Coal Geology reported that, Peabody Energy has entered into an agreement to source coal from PT Supra Bara Energi (SBE), which will be sold on the e ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Planning Commission, India
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
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