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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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Friday, 18 September 09
STANCHART TO ADVISE BAYAN ON INDONESIA COAL FINANCING
Indonesian coal miner PT Bayan Resources Tbk said on Wednesday it has appointed Standard Chartered Bank as a financial adviser for raising at least ...
Friday, 18 September 09
COKING COAL SUPPLY TO FALL 3 MILLION TONS IN CHINA ON SHUTDOWN
Bloomberg reported that, Coking coal supply in China, the largest consumer, may fall by 3 million metric tons a month after a mine accident this mon ...
Thursday, 17 September 09
FOUR LEFT IN INDIA'S MMTC COAL IMPORT TENDER-SOURCE
Reuters reported that, India's MMTC Ltd has accepted four out of five submissions for an import tender for 12.5 million tonnes of coal, with a bid ...
Thursday, 17 September 09
INDIA SEEKS COAL
IBT commodities reported that, India is on a coal buying spree. The big Asian nation is scrambling to cover an expected shortfall in domestic supply ...
Wednesday, 16 September 09
S. LANKA, INDIA'S NTPC TO SIGN $500 MLN COAL DEAL
Reuters reported that, Sri Lanka is to sign a commercial agreement with India's National Thermal Power Corporation (NTPC.BO) to build a $500 millio ...
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- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- VISA Power Limited - India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Planning Commission, India
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- The University of Queensland
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
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