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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, 16 July 10
CHINA EXPORTS 10.14 MILLION TONNES OF COAL IN H1 OF 2010
China exported 10.14 million tonnes of coal in the first half of this year, down 13.1% compared with the corresponding period of last year, accordin ...
Thursday, 15 July 10
SMC TO PURSUE MINDANAO COAL MINING PROJECTS
Philippine Daily Inquirer reported that, DIVERSIFYING CONGLOMERATE San Miguel Corp. is inclined to pursue its coal mining projects in Mindanao ...
Thursday, 15 July 10
ADANI ENTERPRISES WILL BUY $1 BILLION COAL MINE FROM LINC ENERGY - TOP NEWS
Top News reported that, Adani Enterprises has almost managed to obtain a coal mine from Linc Energy for $1 billion in Queensland, Australia. This mi ...
Thursday, 15 July 10
ADANI TO DEVELOP COAL EXPORT TERMINAL IN AUSTRALIA - BUSINESS STANDARD
Business-Standard reported that, The Adani Group, promoter of Mundra Port and Special Economic Zone (MPSEZ), today said it has been selected as the ...
Thursday, 15 July 10
NO IMPROVEMENT IN THE DRY BULK MARKET - INTERMODAL
Broker’s insight
With the Baltic Dry Index today (13/7/2010) standing at 1,790 points - the lowest point since early May 2009 - ...
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- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- The University of Queensland
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
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