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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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- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- The University of Queensland
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
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