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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, 04 August 10
MALAYSIA'S AGATE GROUP TIES UP WITH INDIA'S ECOGREEN TO DEVELOP COAL BUSINESS
COALspot.com: "Malaysian based AGATE Group had entered into an agreement with India's EcoGreen to jointly develop coal business in India ...
Wednesday, 04 August 10
ADARO PRODUCED 21.62 MILLION TONS OF COAL IN 1H 2010
COALspot.com: “Adaro Energy’s production volume during the second quarter of 2010 was 10.26 million tones and for the first half of 2010 ...
Wednesday, 04 August 10
CIL TO TAKE UP NEW PROJECT TO MEET INCREASED DEMAND OF COAL
As part of Annual Plan 2010-11, Planning Commission has projected all India demand of coal 656.31 Million Tonnes against which the indigenous supply ...
Tuesday, 03 August 10
INDONESIA CONSIDERING RUPIAH DENOMINATION
The jakarta post reportd that, the central bank is deliberating a potential Rupiah denomination in light of decreasing exchange rate valuations agai ...
Monday, 02 August 10
DRY BULK MARKET NEEDS TO FIND ADDITIONAL SUPPORT IN AUGUST
The dry bulk market ended another week of rebounding, posting on Friday its 11th straight rise. Still, as analysts point out the rate of this rise h ...
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- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Videocon Industries ltd - India
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
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