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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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- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Australian Coal Association
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- White Energy Company Limited
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
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