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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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Thursday, 03 December 09
PROLONGED COAL MARGIN SQUEEZE AHEAD - WESCOAL
Mining Weekly reported that, Coal junior Wescoal foresees a continued margin squeeze ahead. The JSE AltX-listed company's gross margin was reduced ...
Tuesday, 01 December 09
COAL DEMAND REBOUNDING FROM DOWNTURN - U.S. MINING EXECS
The coal industry is slowly rebounding from last year's recession with demand and prices inching upward, although inventories at U.S. power ...
Tuesday, 01 December 09
INDONESIA COAL OUTPUT SEEN LIFTED BY CHINA, INDIA
Reuters reported that, Indonesia's coal output is expected to grow by as much as 12 percent in 2010, boosted by demand from power hungry China and ...
Monday, 30 November 09
NTPC SCOUTS FOR MORE COAL BLOCKS IN INDONESIA
State-run National Thermal Power Corporation (NTPC) today said it has identified three more coal blocks in Indonesia for acquisition.
"We ha ...
Monday, 30 November 09
THE FUTURES FOR THREE YEARS (2010-2012) WAS SOFT COMPARED TO LAST WEEK - VISTAAR SINGAPORE
COALspot.com (Singapore): BDI continued to drop this week and touched below 4,000 mark level. The drop in BDI was almost 12 pct and closed at 3,975 ...
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- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Planning Commission, India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
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