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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, 06 August 10
KRISHNAPATNAM PORT WINS NON MAJOR PORT AWARD 2ND TIME IN A ROW
COAlspot.com ( Press Release) Krishnapatnam Port, the world-class port on the Indian horizon, took the top honors for the second time in a row, in t ...
Friday, 06 August 10
POLANDS KOPEX GROUP DEVELOPS COAL MINE IN INDONESIA
Polishmarket reported that, Polish mining concern Kopex Group, , is to build the first in Indonesia mechanised underground coal mine. The group is c ...
Thursday, 05 August 10
MORATORIUM MAY HURT NEW PROJECTS: MINING GROUP
The government’s proposed two-year moratorium on issuing new concessions to convert forests and peatlands to other uses may hinder new mining ...
Thursday, 05 August 10
IRON ORE EXPORT BAN COMPOUNDS PROBLEMS OF INDUSTRY - BUSINESS STANDARD
Forex loss of Rs 300 crore (US$ 65.63 million) ; truckers, ports, Railways bear the brunt
The Karnataka government’s move to ban the export ...
Thursday, 05 August 10
DRY BULK LOOKING TO CHINA FOR A NEW RALLY, BUT INDIA COULD BE THIS YEAR'S SURPRISE
The dry bulk market’s rebound has hit a “wall” this week, with the industry’s benchmark, the BDI (Baltic Dry Index) ending i ...
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- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
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- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
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- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Minerals Council of Australia
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
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