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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, 15 February 10
INDONESIA IN TALKS TO RESOLVE BANPU MINE CLOSURE
Indonesia is seeking to resolve a land permiting problem resulting in the closure of a coal mine in Kalimantan operated by a unit of Thailand's top ...
Monday, 15 February 10
PVT ENTRY IN COAL MINING TO BE DELAYED
Entry of private players in coal mining will be delayed. Contrary to expectations, the coal ministry will not move in the Budget session a bill that ...
Sunday, 14 February 10
NEWCASTLE STEAM COAL TRADES AT US$ 91 TO US$ 92
Reuters reported that prompt cargo prices for coal delivered into Europe were largely unchanged recently after a day of subdued trading.
European ...
Saturday, 13 February 10
THE FREIGHT MARKET CONTINUED TO BE WEAK THIS WEEK - CAPT. REDDY
COALspot.com (Singapore): The freight market continued to be weak this week. There have been quite a few spot vessels open Far east and have been fo ...
Saturday, 13 February 10
INDONESIA ISSUES NEW MINING REGULATIONS
Indonesia has issued two new regulations under its mining law to allow firms to start obtaining mining permits, in a move that should increase certa ...
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- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Australian Coal Association
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
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