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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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Friday, 23 October 09
AUSTRALIA APPROVES CHINESE TAKEOVER OF FELIX RESOURCES
* Australia give conditional approval to China's Felix deal
* Chinese owner must list the assets on Australian exchange
Reuters reported that, ...
Friday, 23 October 09
IVANHOE TARGETING 20 MILLION TONS OF COAL OUTPUT IN MONGOLIA
Bloomberg reported that, Ivanhoe Mines Ltd., developing a $4 billion copper and gold mine in Mongolia with Rio Tinto Group, is targeting long-term c ...
Friday, 23 October 09
XSTRATA PLANS $1BN AUSTRALIAN COAL PORT
Xstrata Plc, the world's biggest exporter of steam coal, plans to build a new $1 billion coal port in Australia, it said.
The proposed Balaclava ...
Friday, 23 October 09
MEXICO'S CFE SEEKS 6.24 MLN T COAL FOR 2010-12
Reuters reported that, Mexico's state-owned power monopoly plans to award a tender for 6.24 million tonnes of steam coal in December, according to ...
Friday, 23 October 09
CIL PRICE HIKE LIKELY TO PUSH POWER RATES UP
Business-Standard reported that, May squeeze cement companies’ margins, but the steel sector is unlikely to be affected much.
The upward re ...
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- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Planning Commission, India
- The University of Queensland
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
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