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