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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, 01 March 10
166 MINING COMPANIES THREATEN ENVIRONMENT
Viva News reported that, the Indonesian Forum for the Environment (Walhi) of East Kalimantan reveals that 166 coal mining companies, which are curre ...
Monday, 01 March 10
IRON ORE PRICE NEGOTIATIONS - 80PCT HIKE SEEN BY CHINESE
China Knowledge quoted an insider from a large Chinese steel company said there will be a significant increase in steel prices in the next few month ...
Sunday, 28 February 10
SUPRAMAX CHARTER RATES FOR ONE YEAR IS AROUND US$ 19,000/20,000 PER DAY - VISTAAR SINGAPORE
COALspot.com : The freight market firmed up by almost 10 pct on Supramax and Handy size and about 7 pct on Panamax.
However it was interesting to ...
Sunday, 28 February 10
MINISTRY SEEKS TWO YEAR DELAY TO IMPLEMENT ENVIRONMENT LAW
The Jakarta Post reported that, The ministry of energy and mineral resources has proposed that the government postpone the implementation of the 200 ...
Sunday, 28 February 10
CONTINENTAL TARGETS COAL SALES FROM S AFRICA MINE IN Q2 - MINING WEEKLY
Mining weekly reported that, Junior coal explorer Continental Coal would start coal sales from its Vlakvarkfontein mine, in South Africa, in the sec ...
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- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Parliament of New Zealand
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- The University of Queensland
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- White Energy Company Limited
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
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