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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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Monday, 24 August 09
10 LAKH (1 MILLION) TONNE COAL BURNT IN KPT
Times of India reported that, In an unusual phenomenon, 10 lakh tonne coal cache stored at a plot in Kandla Port Trust was reduced to ashes after it ...
Monday, 24 August 09
LANCO IN TALKS FOR INDONESIAN COAL MINE
Economic Times of India reported that, Infrastructure company Lanco Infratech is in advanced talks with Indonesian engineering, procurement and cons ...
Saturday, 22 August 09
'THE BDI IS LIKELY TO BE HOLDING AROUND 2,500 POINTS' - SHIPPING UPDATE
COALspot.com (Singapore): The dry bulk market continued to be soft and the BDI dropped by 10 percent this week and closed at 24,68 points this week. ...
Saturday, 22 August 09
INDIAN COAL BUYERS RE-EMERGE WITH FRESH TENDERS
Reuters world's largest international multimedia news agency reported that,Indian coal end-users have re-emerged after a few weeks with several fre ...
Friday, 21 August 09
HUANENG YIMIN TO HIKE COAL OUTPUT
China Daily, the largest English portal in China reported that, China's first large coal-electricity joint project, Huaneng Yimin Coal Electricity ...
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- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
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- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- The University of Queensland
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Australian Coal Association
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
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