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