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