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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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Saturday, 07 November 09
THE STEAM COAL MOVEMENT FROM INDONESIA TO INDIA REMAINED QUITE STRONG - CAPT. REDDY
COALspot.com (Singapore): The BDI continued rising this week and was up by 290 points up by almost 9 pct and the index closed at 3,393 points.
B ...
Friday, 06 November 09
COAL INDIA ABANDONS PLAN TO BUY ASSET IN AUSTRALIA
Coal India’s efforts to acquire a mid-sized virgin thermal coal block from a private party in Australia have drawn a blank.
The effort was ...
Friday, 06 November 09
NEW ASSETS WILL INCREASE COKING AND THERMAL COAL PRODUCTION
Coal and metals processing company Coal of Africa Limited (CoAL) aims to produce 10-million tons a year of coking coal and two-million tons a year o ...
Friday, 06 November 09
NTPC TO APPOINT MERCHANT BANKER FOR S AFRICA COAL MINE
State-run power producer NTPC, which is eyeing coal mines in South Africa to meet the gap in domestic fuel supply, will appoint a merchant banker ne ...
Thursday, 05 November 09
MERCATOR LINES AIMS TO BECOME A $5 BILLION COMPANY
Mercator Lines, India’s second largest private sector shipping line, plans to invest and expand, riding India’s next wave of growth, the ...
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- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- VISA Power Limited - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Aditya Birla Group - India
- The University of Queensland
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
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