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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, 27 January 10
PEABODY ENERGY EYES 'RED HOT' ASIAN COAL DEMAND
US miner Peabody Energy has seen already-strong Asian markets become “red hot”, as demand for metallurgical and thermal coal strains sup ...
Wednesday, 27 January 10
KOLKOTTA BASED POWER UTILITY CESC LOOKING FOR 100,000 MT OF COAL FOR MAY & JUNE DELIVERY
COALspot.com (India): Kolkotta based power utility CESC, the flagship company of the diversified RPG group of India, has issued a closed tender to b ...
Tuesday, 26 January 10
FREIGHT COST ERODES INDIA CEMENTS NET
"Freight cost increased from an average of around 14% of sales in the previous quarters to around 20% in the third quarter"
The Decembe ...
Tuesday, 26 January 10
VITOL BUYS EXPORT SPACE AT COLOMBIA SANTA MARTA PORT
Global energy trader Vitol has signed a four-year deal to take export capacity at Colombia's 3 million tonnes a year Carbonsan port in Santa Marta, ...
Tuesday, 26 January 10
AUSTRALIAN FIRM TO MINE COAL IN WEST BENGAL
India Resources Ltd (IRL), a mining firm listed on the Australian Stock Exchange, has decided to enter into contract mining of coal in
India ...
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- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- The University of Queensland
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
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