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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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Tuesday, 20 October 09
COAL PRICES TO SURGE IN 2010 DESPITE AMPLE SUPPLY
Commodity Online reported that, Coal prices are indeed destined to go higher as they follow the rise of ‘coal currencies’ such as Austra ...
Tuesday, 20 October 09
INDIA MAY CUT STAKE IN NTPC BY DECEMBER, POWER SECRETARY SAYS
Bloomberg reported that, India’s government may sell a 5 percent stake in NTPC Ltd., the country’s biggest power producer, as early as D ...
Monday, 19 October 09
COAL PRICE UP AGAIN - RICHARDS BAY TERMINAL
Export prices rose 45 cents, or 0.7%, to an average of 64.05 a metric ton in the week ended Oct. 16, according to McCloskey Group.
The week was & ...
Monday, 19 October 09
COAL MINISTRY SEEKS EXPLANATION FROM AP GENCO
The Hindu Business reported that, the Coal Ministry has asked the Power Generation Corporation of Andhra Pradesh (AP Genco) to explain why there was ...
Monday, 19 October 09
CEMENT UNLIKELY TO COST MORE DESPITE COAL PRICE HIKE
Business-Standard reported that, Cement manufacturers will not immediately hike prices of the construction material, despite a surge in their input ...
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- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Planning Commission, India
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Economic Council, Georgia
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- MS Steel International - UAE
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
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