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