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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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Wednesday, 16 December 09
COAL MARKETS 2010 CONFERENCE - PRESS RELEASE
COALspot.com (Singapore) Press Release – Back for the 8th year, Coal Markets 2010 will be taking place in Singapore on 28 – 29 Jan ...
Wednesday, 16 December 09
CHINA 2010 COAL TERM PRICES SEEN RISING 8% ON YEAR
Term prices of thermal coal for 2010 in China are expected to rise about 8 percent from this year's levels, as demand for power has been roaring ba ...
Wednesday, 16 December 09
KANGAROO RESOURCES TO ACQUIRE INDONESIAN COAL INTERESTS
Emerging coal producer Kangaroo Resources has significantly enhanced its production pipeline in Indonesia after reaching agreement to acquire a coki ...
Wednesday, 16 December 09
UAE'S RAS AL KHAIMAH TO INVEST $5.2B IN EAST KALIMANTAN PROJECT
Shrugging off neighbor Dubai’s debt problems, the smaller United Arab Emirate of Ras Al Khaimah announced on Tuesday that it would increase it ...
Wednesday, 16 December 09
COECLERICI EYES SECOND RUSSIA COAL MINE
* CEO says "seriously considering" mid-small size purchase
* Will use mine to increase exports to Asia
* Says delays at ports will not c ...
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- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
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