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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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Tuesday, 01 June 10
LANCO INFRATECH PLANS POWER PROJECTS IN COASTAL REGIONS
My digital reported that, Hyderabad-based Lanco Infratech will set up power projects in coastal regions based on imported coal. The company is ...
Monday, 31 May 10
NEWCASTLE WEEKLY EXPORTS RISE; SHIP QUEUE SHORTENS
Business week reported that, Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel used in powe ...
Saturday, 29 May 10
FREIGHT MARKET SEEMS TO BE STABILIZING - CAPT. REDDY
COALspot.com: The week was clearly for Cape which went up by almost 21 pct . The BDI was up only by 6 pct.
The other sectors were under pressure ...
Friday, 28 May 10
BERAU COAL GROUP SEEKS US$ 700 M LOAN
PT Bukit Mutiara has decided to revise down its bond issue from US$600 million to US$400 million. In total, it is seeking US$700 million of debt, co ...
Friday, 28 May 10
CHINESE BAN TO HIT INDIAN IRON ORE EXPORTS
Nearly half of India's iron ore exports to China are in serious danger of being wiped out. The local government has imposed a ban on import of low ...
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- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Indian Energy Exchange, India
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
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