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