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