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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, 28 May 10
INDIAS NEYVELI LIGNITE EYEING INDONESIA, SOUTH AFRICA COAL MINES
Integrated mining and power producer Neyveli Lignite Corporation Thursday said it is exploring possibilities for buying coal mines in Indonesia and ...
Friday, 28 May 10
ADARO ACQUIRES 25% ICP AT US$ 335 MIO
Indonesia's second largest thermal coal miner PT Adaro Energy Tbk (ADRO) today announces formation of new joint venture for Indonesian Coal Project ...
Thursday, 27 May 10
KPCL IS LOOKING FOR 0.50 MLN TON TO IMPORTED STEAMING COAL FOR RAICHUR THERMAL POWER STATION
COALspot.com: KARNATAKA POWER CORPORATION LIMITED, India invited from reputed parties meeting the pre qualifications stipulated for the import ...
Thursday, 27 May 10
TNPL TO BUY 0.240 MLN TON NON-COKING COAL FOR SECOND HALF OF 2010
COALspot.com: Tamil Nadu Newsprint and Papers Limited (TNPL), would like to procure 0.24 mln MT of imported Non-Coking Coal in 6 Shipments of about ...
Thursday, 27 May 10
DRY BULK RATES REACH 2010 HIGHS, BUT FUTURE REMAINS UNCERTAIN
This week is proving to be a milestone for the dry bulk market, as the Baltic Dry Index has propelled itself at never before seen levels for 2010. Y ...
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- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Minerals Council of Australia
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- The University of Queensland
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
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