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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
COAL INDIA, SHIPPING CORP MAY FORM VENTURE TO IMPORT COAL
The venture may be on the lines of the firm that CIL plans with SAIL for coal imports in which both to hold 25%
Live Mint reported that, State-ru ...
Tuesday, 06 October 09
ASIA COAL-PRICE REBOUND TOWARDS $71 ON TENDER ACTIVITY
Reuters reported that, Prices of power-station coal in Australia, a benchmark for Asia, rose 4 percent in the latest week to near $71 a tonne, bolst ...
Tuesday, 06 October 09
BHARATHI CEMENT TO ADD 2.5 MT CAPACITY BY 2010
Business-Standard reported that, Bharathi Cement Corporation (BCC) commenced its commercial operations from its Nallalingayapalli manufacturing plan ...
Tuesday, 06 October 09
MOZAMBIQUE TO BUILD COAL RAILWAY
BBC reported that, Mozambique's government has announced that it has secured $500m (£313m) to build a new railway line. The transport ministe ...
Tuesday, 06 October 09
COAL INDIA AIMS TO BUY MINE ABROAD BY MARCH
*Coal India to issue its first coal import tender by Nov
*ArcelorMittal, 9 others in race to develop abandoned mines
*52 firms keen to partner coa ...
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- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- White Energy Company Limited
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Parliament of New Zealand
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
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