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