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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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Saturday, 12 September 09
$1.5B KALIMANTAN COAL RAIL TENDER EXPECTED BY YEAR-END
The Jakarta Globe reported that, In the second announcement on major coal-railway projects in as many days, Central Kalimantan’s top official ...
Friday, 11 September 09
INDONESIA COAL-PRICES AT $66, SUPPLIERS OFFER AT BARGAIN PRICES
Some Indonesian producers were rushing to sell coal at bargain prices to ease excess stocks and catch shipments before the Muslim Eid Al-Fitr festiv ...
Friday, 11 September 09
ALPHA NATURAL EXPECTS HIGHER MET, STEAM COAL PRICES IN 2010
Mining Weekly reported that, There are encouraging signs that metallurgical coal demand in most key global markets is either returning or poised to ...
Friday, 11 September 09
POWER SECTOR'S DEPENDENCE ON COAL TO CONTINUE
The power sector will continue to be largely dependant on coal-based thermal power plants to meet its energy needs for the next 15-20 years, Power S ...
Friday, 11 September 09
L&T EYES AUSSIE COAL MINE
Commodity Online reported that, Larsen and Toubro is in talks to buy a thermal coal mine in Australia for about $300 million. Thermal coal is used f ...
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- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- White Energy Company Limited
- Planning Commission, India
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
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