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