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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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Saturday, 09 January 10
IMPORTED, LOCAL COAL TO BE MIXED IN POWER DRIVE
The government is likely to create a pool price of coal, wherein imported coal and Indian coal could be mixed, making the imported coal becomes more ...
Friday, 08 January 10
SA COAL PRICES TO SPIKE ON RESUMED INDIA BUYING
South African coal prices are set for another price surge to over $100 a ton FOB as Indian and Chinese buyers compete for limited prompt supply, pro ...
Friday, 08 January 10
COLOMBIAN COAL STARTS TO MOVE TO CHINA - TRADERS
* Producer sells cape cargo Colombian coal to China
* Firm bids in freight market
* More shipments expected
Colombian coal is starting to move ...
Thursday, 07 January 10
PT. BUKIT ASAM TO BUILD NEW COAL LOADING TERMINAL AND COAL LOADER
COALspot.com (Indonesia): PT Bukit Asam (Persero) Tbk, Indonesia’s state owned coal mining company, is planning to build an additi ...
Thursday, 07 January 10
RAMKY PLANS COAL MINING IN INDONESIA
Ramky Infrastructure Limited, a Hyderabad-based integrated infrastructure construction and development management company with strategic emphasis on ...
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- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- The University of Queensland
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Economic Council, Georgia
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Bhushan Steel Limited - India
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