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