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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, 09 September 09
CHINESE INTEREST IN AUSTRALIA COAL TICKS UP AS PRICES FALL
After a lull of about two months, Australian thermal coal producers are now seeing renewed interest from Chinese buyers for spot cargoes in the four ...
Wednesday, 09 September 09
SALES FORECAST UP ON BETTER DISTRIBUTION
The Jakarta Post reported that, State coal producer PT Tambang Batubara Bukit Asam (PT BA) expects coal sales to rise by 11 percent next year as it ...
Wednesday, 09 September 09
NTPC HIRES MACQUARIE TO ADVISE INDONESIA COAL MINE PURCHASE
Bloomberg reported that, NTPC Ltd., Asia’s biggest power utility by value, has hired Macquarie Group Ltd. to evaluate a proposed coal mine pur ...
Tuesday, 08 September 09
SOUTH AFRICAN COAL FALLS MOST IN 11 WEEKS ON EXCESSIVE PRICES
Bloomberg reported that, Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the f ...
Tuesday, 08 September 09
INDIA MAY HAVE A JOINT WORKING GROUP FOR COAL WITH INDONESIA: SRIPRAKASH JAISWAL - PRESS RELEASE
Press Information Bureau of India reported in its web site that, The Coal Ministry has, in principle, agreed to set up a Joint Working Group for coa ...
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- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
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- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Ministry of Transport, Egypt
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- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
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- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
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- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
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- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- The University of Queensland
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
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- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
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- Orica Mining Services - Indonesia
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- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- MS Steel International - UAE
- Energy Development Corp, Philippines
- White Energy Company Limited
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
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- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
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- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- PTC India Limited - India
- Merrill Lynch Commodities Europe
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- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
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