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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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Friday, 04 December 09
CHINA'S COAL IMPORTS PREDICTED TO DECLINE IN 2010
China's eye-catching coal import figure s are unlikely to extend into 2010 given the predicted narrow-down of the coal price spread between the hom ...
Friday, 04 December 09
SUBHASH PROJECTS BEGINS MINING AT INDONESIAN COAL BLOCK
Kolkata-based infrastructure company Subhash Projects and Marketing (SPML) has begun mining at its coal block in Indonesia and will begin despatchin ...
Friday, 04 December 09
DRY BULK MARKET IS ON THE RISE AGAIN
Proving rather resilient, compared to previous behaviors, the dry bulk market has been on a rebound mode once again, after a two-week fall, which su ...
Friday, 04 December 09
INDONESIA'S BUMI EYES MARKETING DEAL FOR BERAU COAL
Reuters reported that, Indonesian coal miner PT Bumi Resources Tbk said on Thursday it is in talks to be the exclusive marketing agent for coal prod ...
Friday, 04 December 09
KALIMANTAN GOLD AGREES TO SELL IBP COAL CONCESSION
COALspot.com ( Press Release): Kalimantan Gold Corporation Limited ("KLG" or the "Company"), which undertook drilling and had an ...
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- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Australian Coal Association
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- The University of Queensland
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- White Energy Company Limited
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
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