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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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- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Planning Commission, India
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- VISA Power Limited - India
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
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