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