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