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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, 26 August 09
COAL INDIA MAY HIKE COAL PRICES BY UP TO RS 175 (ABOUT US$ 3.60) A TONNE
The Economic Times reported that, state-owned Coal India may hike coal prices by up to Rs 175 (~ US$ 3.60) a tonne to close the gap between domestic ...
Tuesday, 25 August 09
KOREA TO INTRODUCE COAL-MINING ROBOTS TO REDUCE THE RISK OF HUMAN LOSSES FROM CONVENTIONAL MINING
Far East Gizmos reported that, The state-run Korea Coal Corp. (KOCOAL) signed a memorandum of understanding (MOU) on Monday with three Korean engine ...
Tuesday, 25 August 09
INDIA'S GNFC EXTENDED ONLINE BIDDING FOR PURCHASE OF 260,000 T COAL TO 23RD SEPTEMBER 2009
COALspot.com (India): Gujarat Narmada Valley Fertilizers Co. Ltd. (GNFC) invites offers (e-Tender) for supply of 130,000 MT +/- 5% on firm basis and ...
Tuesday, 25 August 09
ANTAM CONSIDERS ACQUIRING BHP
The Jakarta Post reported that, State mining company PT Aneka Tambang (Antam) is contemplating acquiring BHP Billiton's coal concessions in Central ...
Tuesday, 25 August 09
COAL OUTPUT TO RISE IN H2 BUT EXPORTS TO GO FLAT
The leading english news paper in Indonesia reported that, It is estimated coal production will rise by 5.7 percent in the second semester from a ye ...
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- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Planning Commission, India
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- The University of Queensland
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
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