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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, 09 October 10
SAIL SEEKS LONG-TERM COKING COAL SUPPLY FROM GLOBAL COMPANIES - BUSINESS STANDARD
State-owned Steel Authority of India (SAIL) Friday invited bids from global companies for long-term supply of coking coal to feed its expanding stee ...
Friday, 08 October 10
INVESTORS STILL RELUCTANT TO ENTER DOWNSTREAM INDUSTRIES - THE JAKARTA POST
The Jakarta Post reported that, mining companies are showing a low level of enthusiasm to enter the downstream industries, as required by the 2009 M ...
Friday, 08 October 10
VESSEL OWNERS ARE RELUCTANT FOR INDONESIA TO INDIA COAL TRIPS - FEARNBULK
Handy
Last week ended with a flourish of activity as the Chinese tried to fix any prompt vessels before the Golden week festivities, and since the ...
Thursday, 07 October 10
MIRACH ENERGY GAINS RIGHTS TO EAST KALIMANTAN COAL MINE - THE EDGE SINGAPORE
The Edge Singapore reported that, Mirach Energy says it has gained the rights to produce and sell coal in an open-pit coal mine in Samarinda, the ca ...
Tuesday, 05 October 10
EWP SEEKING VIETNAMS ANTHRACITE COAL
COALspot.com: South Korea’s EWP is seeking Min 200,000MT of Vietnam coal with plus or minus 30,000MT at EWP’s (Korea East West Power Co ...
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- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Planning Commission, India
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
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