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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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Wednesday, 07 October 09
WORLD'S LEADING COAL-BASED PP PROJECT TO BEGIN TRIAL PRODUCTION NEXT YEAR IN NW CHINA
Xinhua Net reported that, a coal-based polypropylene (PP) production project in northwest China, believed to be the world's largest one, is to ...
Wednesday, 07 October 09
INDIA SAIL TO IMPORT 10-11 MLN T COAL IN FY10 - EXEC
Reuters reported that, Steel Authority of India Ltd plans to import 10-11 million tonnes of coal in the current year to March, below last year's 13 ...
Wednesday, 07 October 09
DOMESTIC SHIPPING FIRMS READY FOR NEW RULES ON COAL, INDUSTRY GROUP SAYS
The Jakarta Globe reported that, The domestic coal-shipping sector is ready for the introduction of shipping regulations requiring all power station ...
Wednesday, 07 October 09
CHINESE BANK MAY PULL OUT OF SUMATRA COAL RAILWAY
The Jakarta Globe reported that, The Export-Import Bank of China may pull out of a $1.28 billion South Sumatra coal-railway project with state-owned ...
Wednesday, 07 October 09
COAL INDIA LOOKS AT LONG-TERM PRICE CONTRACTS
Economic Times reported that, Coal India is looking at long-term price contracts, of at least three-four year periods, with foreign entities, 54 of ...
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- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Carbofer General Trading SA - India
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- The Treasury - Australian Government
- PTC India Limited - India
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Planning Commission, India
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
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