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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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Monday, 17 May 10
S. AFRICA CUTS EUROPE COAL SUPPLY, ASIA SALES RISE, TRADER SAYS - BLOOMBERG
Bloomberg reported that, South Africa’s Richards Bay Coal Terminal, Europe’s biggest source of the fuel burned for power, cut shipments ...
Monday, 17 May 10
GREEK CRISIS TO SEE FREIGHT RATES FALL BANGKOK POST
The Greek debt crisis will likely cause shipping rates to fall this quarter enabling SET-listed Precious Shipping Plc to buy second-hand vessels at ...
Monday, 17 May 10
NEWCASTLE COAL QUEUES COULD BE HISTORY - THE HERALD
NEWCASTLE'S infamous coal queues could be a thing of the past if a plan to have the ships anchor over the horizon succeeds against the doubts of it ...
Sunday, 16 May 10
THREE FIRMS SHORTLISTED FOR CIL'S $ 2BN OVERSEAS PROJECTS - ECONOMIC TIMES
Economic Times reported that, State-owned Coal India Ltd (CIL) has shortlisted US firms Massey Energy and Peabody Energy, besides Indonesian Novem/S ...
Sunday, 16 May 10
INDIKA ENERGY & COAL ASSETS EXPANSION
Insider stories reported that, PT Indika Energy Tbk (INDY) has three portfolio coal assets, PT Kideco Jaya Agung, coal asset in East Kalimanta ...
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- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
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- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- White Energy Company Limited
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
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