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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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Wednesday, 16 September 09
NAPOCOR GETS 3 OFFERS IN COAL TENDER
ABS-CBN news reported that, The Philippines' state-run National Power Corp. (Napocor) said on Wednesday it received offers from 3 Indonesian firms ...
Wednesday, 16 September 09
S.KOREA KOSEP BUYS 1.06 MLN T COAL-SOURCE
* 6,080 kcal/kg at $63-65, 4,900-5,350 kcal/kg at $56-58
* Initially about 5 mln T offered for tender
Reuters reported that, Korea South ...
Tuesday, 15 September 09
CHINA COAL EXPORT ROSE M-O-M FOR THE STRAIGHT 3 MONTHS
Alibaba reported that, In the January-August period, China coal exports slid by 55.9% to 14.83mln tons month on month. In August, China exported 1.9 ...
Monday, 14 September 09
CIL MAY REDUCE FLOOR PRICE OF E-AUCTION COAL
After receiving a lukewarm response to the forward e-auction started in two of its subsidiaries, Coal India Limited (CIL) is mulling to reduce the f ...
Monday, 14 September 09
INDONESIAN GOVT UPBEAT ABOUT $1.5B, 185-KM COAL RAILWAY PROJECT
In addition to a 30-year concession right, the government will also award a competitive pricing scheme as an incentive to lure investors in a US$1.5 ...
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- Posco Energy - South Korea
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Planning Commission, India
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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