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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, 13 April 10
CHINA COAL SEEING 'STRONG DEMAND,' PUDA COAL CFO SAYS - BUSINESS WEEK
Business Week reported that, China coal prices will increase this year as the nation’s industry expands and a drought in the southwest region ...
Tuesday, 13 April 10
PEABODY, COAL INDIA CONFIRM 'EARLY STAGE' TALKS - MINING WEEKLY
Mining Weekly reported that, US coal-miner Peabody Energy is holding discussions with Coal India, the company said on Monday, after an Australian ne ...
Tuesday, 13 April 10
ANGLO PREDICTS HIGH COAL PRICES, STEADY SUPPLY
Busrep / Reuters reported that, Coal prices were expected to remain strong this year, while exports would match last year's despite rail cons ...
Tuesday, 13 April 10
THE PANAMAX MARKET CONTINUED TO STRENGTHEN - BRS DRY BULK
Panamax rates continue to beat the market, and the Panamax 4TC is now trading at a 25% premium to the Cape 4TC — the biggest margin since the ...
Monday, 12 April 10
INDIA'S NALCO TO INVEST BIG IN INDONESIA'S ALUMINIUM PROJECT - BERNAMA
Bernama reported that, India's state- owned National Aluminium Company Ltd (Nalco) is to pump in massive investment to set up a aluminium smelter a ...
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- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- The University of Queensland
- Bhushan Steel Limited - India
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- PTC India Limited - India
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Independent Power Producers Association of India
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
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