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