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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, 19 March 10
COAL INDIA TO HIT CAPITAL MARKETS IN JULY
India’s largest coal producer, Coal India Ltd (CIL), expects to hit the capital markets by July, company chairman Partha S. Bhattacharyya said ...
Thursday, 18 March 10
COAL IMPORTS SOAR IN NANTONG PORT OF JIANGSU PROVINCE CHINA
BloombergUTV reported that, Coal imports at Nantong Port, located in coastal China's Jiangsu Province, soared 13 times to 581,000 tonnes in the fir ...
Thursday, 18 March 10
INNER MONGOLIA TO CAP COAL OUTPUT AT 700 MLN TONS IN 2010
Alibaba / China Knowledge reported that, Inner Mongolia, China's northern border autonomous region, plans to control coal output at 700 million ton ...
Thursday, 18 March 10
THE INDIAN MARKET WAS QUIET, BUT BECAUSE OF THE TIGHT TONNAGE SITUATION STILL FIRM - FEARNLEYS AS
Handy
Activity continues to be solid in the Atlantic.
Supramax physical market is strong which pushed the BSI to a 17 month high at ...
Thursday, 18 March 10
INDONESIAN COAL PRODUCTION EXPECTED TO BEAT EARLIER FORECAST
The Jakarta Globe reported that, the government expects coal output this year to exceed its initial projection of 250 million metric tons as the dri ...
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- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- White Energy Company Limited
- Australian Coal Association
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Parliament of New Zealand
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
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