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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, 26 April 10
COAL INDIA NEARS PORT DEAL WITH VIZAG STEEL - DNA
DNA India reported that, Coal India Ltd (CIL), the country’s largest coal producer, is close to signing a deal to acquire space at Vizag Steel ...
Sunday, 25 April 10
THE WAITING AT INDIAN PORTS FOR COAL VESSELS WAS QUITE NORMAL - VISTAAR
COALspot.com: The BDI remained unchanged this week and all other sectors also the change was not much.
The cape index continued to move up and wa ...
Saturday, 24 April 10
NTPC TO BUY COAL MINES IN KAZAKHSTAN - TELEGRAPH INDIA
Telegraph India reported that, NTPC Ltd plans to acquire coal mines and operate two thermal power plants in Kazakhstan.
“We are exploring t ...
Saturday, 24 April 10
CHINA'S COAL IMPORTS DOUBLE IN MARCH
China's General Administration of Customs said that the country imported 15.22 million tons of coal last month, more than double the amount it impo ...
Friday, 23 April 10
KPCL EYES MINE IN INDONESIA - BUSINESS STANDARD
Business-Standard reported that, Karnataka Power Corporation Ltd (KPCL), the state-owned power generator, is exploring the possibility of acquiring ...
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- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Central Electricity Authority - India
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
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