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