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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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Monday, 12 October 09
INDONESIA TO CUT ROYALTIES TO BOOST LOW QUALITY COAL
Reuters reported that, Indonesia, the world's biggest exporter of thermal coal, plans to cut royalties paid by producers holding certain contracts ...
Monday, 12 October 09
SAMPUR COAL POWER PLANT AGREEMENT
Sunday Observer reported that, The construction work of the Sri Lanka-India joint venture coal power plant which costs US dollars 500 million will c ...
Saturday, 10 October 09
SHORT PERIOD RATES FOR SUPRAMAX WAS AROUND US$ 17,000 PER DAY FOR VESSELS OPENING FAR EAST / SE ASIA - CAPT. REDDY
COALspot.com (Singapore): The BDI again firmed up this week by almost 14 pct to 2,695 points. The cape size index moved up quite sharply by 25 pct t ...
Saturday, 10 October 09
COAL PRICES TIPPED TO SURGE BY 40% AS GLOBAL DEMAND RECOVERS NEXT YEAR
Power-station coal prices may climb by more than 40 percent in 2010 from current levels as a global economic recovery boosts demand from power plant ...
Saturday, 10 October 09
PT BUMI RESOURCES TO EXPECT 2010 ELECTRIC AND COAL PRICE UP TO US$ 100/T
Indonesia coal producer, PT Bumi Resources recently stated that the revival of the global economy pushes up the demand from power plants and steel m ...
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- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Parliament of New Zealand
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Thiess Contractors Indonesia
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Australian Coal Association
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Planning Commission, India
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
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