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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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Thursday, 24 September 09
S.KOREA HYUNDAI STEEL TO BUY COAL FROM SIBERIA
Reuters reported that, South Korea's Hyundai Steel said on Wednesday it will buy a maximum of 300,000 tonnes of coal per year from Siberian Anthrac ...
Thursday, 24 September 09
NO IMPORTED COAL-BASED UMPPS: TATA POWER
Will wait until policy environment becomes more favourable.
Business Standard reported that, Tata Power Company (TPC), India’s largest priv ...
Thursday, 24 September 09
BUMI RAISES $1.9 BILLION SELLING DEBT TO CHINA'S CIC
Bloomberg reported that, PT Bumi Resources, Indonesia’s biggest coal producer, said it raised $1.9 billion selling debt to China’s sover ...
Thursday, 24 September 09
MACQUARIE DOWNGRADES U.S. COAL SECTOR TO NEUTRAL
Reuters reported that, Macquarie Research downgraded the U.S. coal sector to "neutral" from "overweight" as it believes that dem ...
Thursday, 24 September 09
CHINA WILL BE IMPORTER OF COKING COAL NEXT YEAR, MCCLOSKEY SAYS
Bloomberg reported that, China, the world’s largest coal user and producer, will remain an importer of the fuel through next year, according t ...
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- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- White Energy Company Limited
- Medco Energi Mining Internasional
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Minerals Council of Australia
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Planning Commission, India
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
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