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