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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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Tuesday, 21 July 09
FIRST QUARTER COAL MARKET AND EURACOAL'S OUTLOOK FOR THE FUTURE
Euracoal reports that for the first time in many years, the world market for hard coal fell by some 8 % during the first quarter 2009. This latest E ...
Monday, 20 July 09
CHINAS COAL DEMAND, OUTPUT TO PICK UP IN H2 - GROUP 2
Financial24 reported that, China's coal demand is expected to gradually pick up in the second half of the year, and coal output will likely grow fa ...
Monday, 20 July 09
ADANI POWER LAUNCHES IPO, AIMS HIGHER CAPACITY
Economic Times reported that, Adani Power Ltd, a power project development company, promoted by Adani Enterprise went for an initial public offering ...
Monday, 20 July 09
BANPU'S SECOND-HALF PROFIT MAY DROP ON COAL PRICES
Bloomberg Reported that, Banpu Pcl, Thailand’s biggest coal producer, expects profit to decline in the second half from the first six months a ...
Monday, 20 July 09
CHINA COAL PRODUCES 52.7 MLN TONNES OF COAL IN 1H, UP 5.4 PCT
China Mining reported that, China Coal Energy Co., the country's second largest coal producer, said Saturday that it produced 52.67 million tonnes ...
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- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Australian Coal Association
- Bhatia International Limited - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
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