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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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- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
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