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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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Friday, 17 September 10
CWP COAL WASHING PLANTS MACHINERY LANDS ON RUSSIAN MARKET!!
Press Release: CWP Coal Washing Plants Machinery Industry & Trade Co. which was founded in 1990, has been operating in Izmir with its closed pro ...
Friday, 17 September 10
FREIGHT RATES TO DECLINE FURTHER - ICICI SEC
Broking firm ICICI Securities said tanker freight rates reported a sharp drop with rates of Suezmax and Aframax carriers declining by 16% to USD 8,6 ...
Friday, 17 September 10
R-POWER, ADANI, GMR TO BID FOR $1-BN MINE
Reliance Power, Adani Power and GMR are in the race for a coal mine asset in Australia. The valuation of the asset is close to $1 billion (Rs 4,600 ...
Thursday, 16 September 10
RPG GROUP BUYS 10% IN AUSSIE COAL FIRM RESOURCE GENERATION
Dealcurry reported that, India's RPG Group's Integrated Coal Mining Limited (ICML) has acquired 10% stake (18,268,053 shares) in Resource Generati ...
Wednesday, 15 September 10
VIETNAM TO IMPORT UP TO 15 MLN TONS COAL/YR BY 2015 - VIETNAM BUSINESS
Vietnam Business reported that, Vietnam will need to import 3 million to 15 million tons of coal a year by 2015, rising to 21 million to 40 million ...
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- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Australian Coal Association
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- VISA Power Limited - India
- Thai Mozambique Logistica
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