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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, 30 November 09
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Indian state utilities are leading a switch to coal index-linked pricing from fixed prices to secure imports and to be visibly paying fair market pr ...
Monday, 30 November 09
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Unlisted Indonesian coal producer Berau will redeem outstanding bonds before the acquisition by Recapital Advisers is completed by the end of this y ...
Friday, 27 November 09
IMPORTING LIGNITE INTO COAL RICH KOSOVO
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Friday, 27 November 09
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Mining Weekly reported that, Despite significant coal-mining capacity recently discovered in the Southern African region, according to senior coal a ...
Friday, 27 November 09
BHP SEEKS VARIABLE COKING COAL PRICE IN JAPAN, NIKKEI SAYS
Bloomberg reproted that, BHP Billiton Ltd. has asked Japanese steelmakers to move to pricing of coking coal linked to spot rates rather than negotia ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
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