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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, 22 July 09
TAIPOWER RECEIVES 37 OFFERS IN TENDERS
State utility Taiwan Power has received offers for 37 panamax cargoes of bituminous and sub-bituminous coal in two tenders involving 12 panamax ship ...
Wednesday, 22 July 09
PRIME MINISTER APPROVAL SOUGHT TO HIKE COAL PRICES IN INDIA
PTI reported that decrying the low prices of the industrial fuel, the coal ministry will approach Dr Manmohan Singh PM of India next month for raisi ...
Tuesday, 21 July 09
BHATIA SAYS GETS ORDER FOR 800,000T COAL FROM KPCL
Reuters reported that, Indian traders Bhatia received on Tuesday a purchase order for 800,000 tonnes thermal coal at $63.00 C&F from Karnataka P ...
Tuesday, 21 July 09
NZ'S PIKE RIVER SAYS SELLS COAL AT $128 PER TONNE
Reuters reported that, New Zealand miner Pike River Coal said on Tuesday it had sold its premium hard coking coal at $128 a tonne for the curr ...
Tuesday, 21 July 09
NEWCASTLE COAL EXPORTS FALL 5%, SHIP QUEUE INCREASES
Bloomberg reported that, Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, fell 5 per ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- PTC India Limited - India
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Planning Commission, India
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
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