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