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