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