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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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Wednesday, 10 February 10
ANGLO AMERICAN TIPS COAL PRICE RISE AFTER RAIN, AUSTRALIAN SAYS
Anglo American Plc expects coking coal contract prices to rise after weeks of heavy rain in Queensland state cut output by as much as 10 million met ...
Wednesday, 10 February 10
KANGAROO RESOURCES COMMENCES MINING AT MAMAHAK COKING COAL PROJECT
International coal producer Kangaroo Resources has kicked off mining at its second Indonesian coal operation, the Mamahak Coking Coal Project in Eas ...
Wednesday, 10 February 10
CHINA DENIES CLIVE PALMER'S COAL DEAL
ONE of China's biggest government-owned companies yesterday repudiated mining billionaire Clive Palmer for overstating what he said was Australia' ...
Tuesday, 09 February 10
INDIANS SAY SEEKING COAL BARGAINS VIA INDEX PRICES
* Indonesian cheaper than S.African - traders
* End-users wait for price falls before tendering
Indian coal traders responsible for the bulk of ...
Tuesday, 09 February 10
EURO COAL-PROMPT SLIDES WITH OIL PRICES
* April S.African cargo trades at $83.50/T FOB, unchanged
* April DES cargo trades at $74.75 a tonne, down $1/T
* Russia's Kuzbassrazrezugol sees ...
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- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- The University of Queensland
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
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