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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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Saturday, 17 October 09
US COAL MINERS LOOKING AT LOWER PROFITS
Most US coal miners are looking at sharply lower third-quarter earnings, but those that produce coal for steelmaking and export should enjoy higher ...
Friday, 16 October 09
INDONESIA EXPORTED 19,194,857 MT OF COAL IN SEPTEMBER 2009 - SOURCES
COALspot.com (Indonesia): Indonesia exported 19,194,857 MT of coal in September 2009. Out of total exported quantity, South Korea imported abou ...
Friday, 16 October 09
NAVIGATING THROUGH STORMY WATERS
To Theodore E Veniamis, the President of the Union of Greek Shipowners, the current turmoil in world shipping is due to the cyclical nature of marit ...
Friday, 16 October 09
COAL INDIA RAISES PRICE BY 11%
Trak reported that, State-owned Coal India Ltd (CIL) has raised the price of coal produced by its subsidiaries by an average of 11 percent effective ...
Thursday, 15 October 09
SOUTH AFRICAN MINING COMPANY ACCEPTED $92 MILLION BID FOR COAL MINE STAKE IN SIYANDA COAL
Paguntaka reported that, Sentula Mining Ltd. gained in Johannesburg trading after the South African company accepted a 686 million-rand ($92 million ...
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- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- The University of Queensland
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Parliament of New Zealand
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
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