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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, 06 August 09
CASES FILED AGAINST ESSAR ALGOMA OVER TERMINATED COAL SHIPMENTS
Steel Guru reported that, It is reported that units of International Coal Group Inc and Arch Coal Inc have filed federal lawsuits in the same court ...
Thursday, 06 August 09
COMPULSORY MINE RECLAMATION PROPOSED FOR A MINING'S LIFETIME
Tambang reported that, A data from the Forestry Ministry showed that almost 65 percent of mining activities operated under contract of work, c ...
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Tambang reported tht, Concrete and tangible endeavors are key to guarantee the attainment of added value from mining sector. The Indonesian Ministry ...
Thursday, 06 August 09
PRESS RELEASE - CZECH COAL CONTESTS THE J&T AND IPO MERGER
Prague, 3 August 2009 - The Czech Coal Group filed today objections to the proposed merger of the J&T Group and International Power Opatovice (I ...
Wednesday, 05 August 09
SMALLER DRY BULK CARRIERS TO FARE BETTER UNTIL THE END OF 2009 - SHIPPING
Marcor Shipping reported that, Smaller ship types are expected to outtake larger ones in dry bulk trade for the period until the end of the year. Th ...
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- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- PTC India Limited - India
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
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