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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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Monday, 04 January 10
TOKYO ELECTRIC SEALS XSTRATA COAL DEAL
Tokyo Electric Power Co has agreed to pay about $US85 a tonne for Australian thermal coal in 2010 from miner Xstrata, a source familiar with the pri ...
Monday, 04 January 10
IND-BARATH TO SHIFT PROJECT FROM AP TO TN
Hyderabad-based power producer Ind–Barath is planning to set up a power plant at Tuticorin, Tamil Nadu. The proposed project would attract inv ...
Sunday, 03 January 10
NEWCASTLE THERMAL COAL PRICES FALL IN FIRST DECLINE IN 3 WEEKS
Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, declined 1.5 percent, falling for the first time in three weeks ...
Sunday, 03 January 10
NTPC SEEKS REPORT ON TRANSPORTING COAL THROUGH WATERWAYS
State-run National Thermal Power Corporation (NTPC), the country’s largest power utility, has asked for a “holistic” feasibility r ...
Sunday, 03 January 10
BHP TO STAY IN MARUWAI AND TO KEEP 75 PERCENT OF THE STAKE
Despite recent statements that it would pull out completely from Indonesia, the world's largest mining company BHP Billiton has now admitted that i ...
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- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Trasteel International SA, Italy
- Minerals Council of Australia
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Australian Coal Association
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
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