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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, 31 October 09
FLSMIDTH WINS MAJOR INDIAN COAL HANDLING PROJECT
Top global supplier of minerals processing and materials handling equipment, FL smidth, has won another important coal handling contract in India
...
Saturday, 31 October 09
INDIA OPENING POWER SECTOR TO PRIVATE INVESTMENT, COAL STILL THE FUEL OF CHOICE
Energy Tribune reported that, With coal-fired power plants as the primary source, India’s electricity generation sector space has been dominat ...
Friday, 30 October 09
MINERS TOLD TO SPEND ON LOCAL SERVICE FIRMS
The energy and mineral resources ministry has issued a ministerial regulation ordering mining firms to prioritize hiring domestic service companies ...
Friday, 30 October 09
TATA POWER MAY BUY COAL FROM RIVERSDALE'S MOZAMBIQUE MINES
Bloomberg reported that, Tata Power Ltd., India’s biggest electricity generator outside state control, may buy coal from a mine in Mozambique ...
Thursday, 29 October 09
MMTC AWARDED 12.5 MILLION TONS TO THREE INDIAN TRADERS
COALspot.com (India): State-run trading firm MMTC awarded tenders for the import of 12.5 million tonnes of coal for NTPC to three Indian coal trader ...
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- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- White Energy Company Limited
- PTC India Limited - India
- Interocean Group of Companies - India
- The University of Queensland
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Australian Coal Association
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- MS Steel International - UAE
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
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