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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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Thursday, 13 August 09
RIO PREPARES COAL IPO AFTER FAILING TO FIND BUYER
Bloomberg reported that, Rio Tinto Group, the world’s third- largest mining company, is preparing an initial public offering for its U.S. ...
Thursday, 13 August 09
NOBLE'S PROFIT DOUBLES ON GLOUCESTER COAL ACQUISITION
Bloomberg reported that, Noble Group Ltd., a Hong Kong-based supplier of raw materials from soybeans to coal, said second- quarter profit more than ...
Thursday, 13 August 09
CHINA COAL-PRICES UNCHANGED, BUT LIKELY TO MOVE HIGHER
Alibaba reported that, Spot coal prices in China's top coal port Qinhuangdao were unchanged from a week earlier, but are still looking bullish in t ...
Thursday, 13 August 09
INDONESIA'S BERAU COAL SEES 2010 OUTPUT UP 16 PCT
Reuters reported that, Indonesia's fifth-largest coal miner, PT Berau Coal, expects 2010 production to be nearly 16 percent higher than this year, ...
Thursday, 13 August 09
JAYPEE GROUP. L&T INK RS 4,000-CRORE (US$ 824,818,084) DEAL
Second order bagged by L&T in the supercritical segment.
Jaiprakash Power Ventures Ltd (JPVL), promoted by the $7-billion Jaypee group, has s ...
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- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Economic Council, Georgia
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
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