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