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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, 28 September 09
TATA POWER SCOUTS FOR COAL BLOCKS ABROAD
Business Standard reported that, private power producer Tata Power is scouting for coal mines abroad, including Australia and Mozambique, to meet de ...
Saturday, 26 September 09
THE INDIA / FAR EAST SEEMS WILL BE FIRM NEXT WEEK - VISTAAR
COALspot.com (Singapore): The dry bulk market was soft this week and the BDI dropped by almost 7 pct to 2,183 points. The cape size index dropped by ...
Saturday, 26 September 09
GSECL PLANS TO PROCURE 15 LAKH (1.5 MILLION) MT OF IMPORTED COAL
Business Standard reported that, State-run power generation company, Gujarat State Electricity Corporation Ltd (GSECL) intends to procure 15 lakh (1 ...
Saturday, 26 September 09
SAIL TO SET UP TWO SLAG-BASED CEMENT MANUFACTURING UNITS
Rediff Business reported that, Government-owned Steel Authority of India Ltd, the country's largest steel producer, is looking to set up two greenf ...
Friday, 25 September 09
INDONESIA STOCK EXCHANGE EXAMINES BUMI DEAL WITH CHINESE SOVEREIGN WEALTH FUND
The Jakarta globe reported that, The Indonesia Stock Exchange is looking into the $1.9 billion financing deal between PT Bumi Resources, the country ...
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- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Planning Commission, India
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- The University of Queensland
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
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