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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, 29 October 09
COAL OF AFRICA SEES VELE OUTPUT BY APRIL 2010
* First coal from Mooiplaats mined and sold
* Talks with Transnet on rail PPP on track
Reuters reported that, Coal of Africa (CoAL) said on Mond ...
Thursday, 29 October 09
UAE FUND EYES INDIA POWER FOR INDONESIAN COAL
Reuters reported that, the UAE's Middle East Coal (MEC) is in talks to buy equity stakes in India's power plants in exchange for long-term coal su ...
Thursday, 29 October 09
CESC POSTS RS 126 CRORE (US$ 26,655,178) NET PROFIT IN QUARTER TWO
Economic Times reported that, Energy major CESC posted a marginal increase in net profit at Rs 126 crore (US$ 26,655,178) for the quarter ended Sep ...
Thursday, 29 October 09
INDIA MMTC TENDER SET TO BOOST S.AFRICA COAL
The South African coal market is set to be boosted further by India's state-owned trading firm MMTC Ltd's tender for 12.5 million tonnes, Indian t ...
Thursday, 29 October 09
INDIA CEMENTS SET TO ACQUIRE COAL MINE IN INDONESIA
Business-Standard reported that, India Cements is set to acquire a coal mine in Indonesia for around $20 million (around Rs 100 crore). The company ...
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- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- White Energy Company Limited
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
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