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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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Wednesday, 25 November 09
NAPOCOR SCRAPS AWARD OF 715,000 TONS COAL
Top Philippine electricity producer National Power Corp. (Napocor) said on Wednesday it had cancelled plans to award 715,000 tons in coal supply con ...
Wednesday, 25 November 09
RISING FREIGHT RATES HIT COAL IMPORTERS
While state-owned NTPC’s 12.5 million tonne coal import order may have been aimed at plugging the shortage of coal at its thermal power plants ...
Wednesday, 25 November 09
CSN TO BUY RIVERSDALE STAKE TO BOOST COAL SUPPLIES
Cia. Siderurgica Nacional SA plans to buy 16.3 percent of Australian coal-exploration company Riversdale Mining Ltd. for about A$190.5 million ($175 ...
Tuesday, 24 November 09
ICRA DOWNGRADES TNPL`S RATING TO LAA
Credit rating agency, ICRA has revised the long term rating for the Rs 11.25 billion long-term fund-based bank facilities and Rs 1.5 billion non-con ...
Monday, 23 November 09
INDONESIA MINING RULE THREATENS INVESTMENT DRIVE
A new Indonesian mining rule, limiting contract work that can be outsourced and favouring local players, is shaping up as a new blow to plans ...
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- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
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