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