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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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- Star Paper Mills Limited - India
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- Economic Council, Georgia
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- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
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- Sarangani Energy Corporation, Philippines
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- Cigading International Bulk Terminal - Indonesia
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- The Treasury - Australian Government
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- Anglo American - United Kingdom
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- Alfred C Toepfer International GmbH - Germany
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- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
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- Minerals Council of Australia
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
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- Coalindo Energy - Indonesia
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- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
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- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
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- Videocon Industries ltd - India
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- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
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- Indika Energy - Indonesia
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- Global Coal Blending Company Limited - Australia
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- Georgia Ports Authority, United States
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- Australian Commodity Traders Exchange
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- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- The University of Queensland
- Independent Power Producers Association of India
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- Australian Coal Association
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- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
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- Global Business Power Corporation, Philippines
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- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Planning Commission, India
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- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Deloitte Consulting - India
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- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
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- Power Finance Corporation Ltd., India
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- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
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- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
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- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Parliament of New Zealand
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- Vedanta Resources Plc - India
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