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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, 07 December 09
CHINA COKING COAL PRICE MAY RISE 14% ON DEFICIT, CITIGROUP SAYS
Coking coal prices in China, the world’s biggest steel producer, may rise 14 percent next year because of a supply deficit, Citigroup Inc. sai ...
Monday, 07 December 09
JSW STEEL TO SELL MOZAMBIQUE COAL MINE FOR RS 300 CRORE
JSW Steel may sell its coal mine in Mozambique to sister company JSW Energy as the mine has become commercially unviable for the steel producer, a t ...
Monday, 07 December 09
BLACK RIDGE MINING ENTERS AGREEMENT WITH INDONESIAN COAL PRODUCER
Australian-listed Black Ridge Mining has entered into an exclusive dealing and non-circumvention agreement with Indonesian coal producer PT. Inmas A ...
Sunday, 06 December 09
THE ECI / CHINA (S7) ROUTE SOFTENED AND WAS AT US$ 25,275 PER DAY - VISTAAR
COALspot.com (Singapore): "The market was bit soft in the beginning of the week, however towards mid week that market started to pick up and th ...
Sunday, 06 December 09
NEW MANGALORE PORT GETS UPCL'S FIRST COAL PARCEL FROM INDONESIA
The Lanco Group-promoted Udupi Power Corporation Ltd (UPCL) has received the first parcel of imported coal from Indonesia at the New Mangalore Port. ...
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- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- PTC India Limited - India
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Planning Commission, India
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
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