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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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Wednesday, 11 August 10
BANPU SECURES TAKEOVER LOAN - BANGKOK POST
Bangkok Post reported that, Banpu Plc, Asean's largest coal miner, has secured loans worth US$2 billion from Thai and foreign banks to proceed with ...
Tuesday, 10 August 10
KOREA'S EWP TO BUY 4 MILLION TON OF 3700 AND 4600 NAR COAL AT FIXED PRICE
COALspot.com: Korean utility East-West Power out with the tender to buy 0.670 million tons with a minimum calorific value of 4600 NAR and 0.350 mill ...
Tuesday, 10 August 10
COAL CONSTRAINS CORE SECTOR GROWTH IN JUNE 2010
Growth in the six key infrastructure sectors decelerated for the third month in June. This is primarily due to last year’s high base effect. D ...
Sunday, 08 August 10
SOUTH AFRICA INCREASES COAL EXPORTS TO INDIA BY 74% IN JULY, TRADER SAYS
South Africa’s Richards Bay, the continent’s largest coal terminal, increased sales to India by 74 percent in July from June, according ...
Saturday, 07 August 10
INDIAN COAL IMPORTS WILL PLAY AN IMPORTANT PART IN KEEPING THE FREIGHT MARKET FIRM IN FUTURE - VISTAAR
COALspot.com: The freight market was volatile with market ending firmed and the BDI crossing 2000 points up by 3 pct, however the BCI was up by 14 p ...
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- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- The University of Queensland
- Economic Council, Georgia
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