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