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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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Monday, 14 September 09
BOOM FORECAST FOR COAL OUTPUT
SMH.com reported that, A COAL investment boom is driving Australian production to new peaks even as our biggest export markets shift towards cleaner ...
Sunday, 13 September 09
COAL INDIA MAY ACQUIRE ASSETS OF RIO TINTO
Coal India’s plan to acquire overseas mining assets is gathering steam. After a breakthrough in Mozambique, the coal behemoth has received&nbs ...
Saturday, 12 September 09
THE INDIA / FAR EAST SEEMS WILL CONTINUE TO BE SOFT UNTIL THE IRON ORE MOVEMENTS PICKS UP - CAPT. REDDY
COALspot.com (Singapore): The dry bulk market continued to be stable at almost as same levels as last week and the BDI was at 2,468 points.
...
Saturday, 12 September 09
GOVT REQUESTS MORE TIME TO ACQUIRE 21% SHARES IN NNT
The Jakarta Post reported that, the government plans to request a postponement for the acquisition of 21 percent shares in PT Newmont Nusa Tenggara ...
Saturday, 12 September 09
INDONESIAN CO KEEN ON TRADING COAL FOR EQUITY IN POWER PROJECTS
Though most large power project promoters have their own mines in Indonesia, MEC is confident of convincing Indian companies as its price is quite a ...
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- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- PTC India Limited - India
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
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