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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
PTC INDIA UNIT CHASES 2.5 MTPA INDONESIAN COAL
Reuters reported that, PTC Energy is in talks with an Indonesian firm to source 2.5 million tonnes per annum (MTPA) coal for its 350-400 MW power to ...
Thursday, 29 October 09
CHINA MAY SEEK THERMAL COAL ELSEWHERE IF AUSTRALIAN EXPORT COSTS RISE, SAYS REPORT
The Australian reported that, CHINA is likely to turn to alternative markets for thermal coal if the cost and availability of Australia's exports a ...
Thursday, 29 October 09
CURRENCIES, ASIA DEMAND TO LIFT EUROPE COAL PRICE
Supportive currency movements and strong Asian demand mean the price of coal delivered into Europe is poised to rise more than 30 percent to above $ ...
Wednesday, 28 October 09
AUSTRALIAN POWER STATION COAL PRICE TOPPED USD 73 A TONNE
Reuters reported that prices of power station coal in Australia, a benchmark for Asia, crept up for the fourth week and topped USD 73 a tonne, as a ...
Wednesday, 28 October 09
MIDDLE EAST COAL EYEING INDIAN POWER PLANTS IN EXCHANGE FOR LONG TERM COAL SUPPLY
Reuters reported that UAE's Middle East Coal is in talks to buy equity stakes in India's power plants in exchange for long term coal supply.
ME ...
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- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
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