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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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Sunday, 14 March 10
CHINESE COAL PRICE MAY RISE TO TRADE NEAR SPOT, MACQUARIE SAYS
Bloomberg reported that, Steel mills in China, the world’s biggest producer of the alloy, may pay more for domestic coking coal this year as d ...
Sunday, 14 March 10
THERE IS NO INDICATION OF SLOWING DOWN OF IRON ORE AND COAL IMPORTS BY CHINA - VISTAAR SINGAPORE
COALspot.com: The dry bulk freight market continued the upward trend and the BDI closed 8.14 pct this week.
The Cape index up by 10.32 pct ...
Saturday, 13 March 10
INDONESIA COAL EXPORTS DROP IN FEBRUARY
COALspot.com: Indonesia, the world largest coal exporter, exported 24.38 million tons in January 2010 which fell slightly to 22.89 mln ton of coal i ...
Saturday, 13 March 10
INDONESIA TELLS BUKIT ASAM TO DITCH PARTNER IN SUMATRA RAILWAY UNLESS PROJECT STARTS
The Jakarta Globe reported that, the Indonesian government has urged state-owned miner PT Tambang Batubara Bukit Asam to look for new partners to he ...
Saturday, 13 March 10
OPTIMUM COAL AIMS TO RAISE R1,6 BILLION IN LISTING
All Africa reported that, COAL mining and exploration company Optimum Coal yesterday announced plans to list on the JSE at the end of the month ...
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- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- The University of Queensland
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Parliament of New Zealand
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
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