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