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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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Monday, 20 July 09
INDONESIA PRODUCES 72 MILLION MT IN FIRST HALF OF YEAR: OFFICIAL
Indonesia produced 72 million mt of coal in the first half of 2009, or 31.3% of the government’s target this year, a senior government officia ...
Sunday, 19 July 09
JINDAL S&P IN TALKS TO BUY SA COAL MINE FOR RS 350-400 CR (US$ 80 - 90 MILLION)
Economic Times reported that, Naveen Jindal-led Jindal Steel & Power (JSPL) is acquiring a thermal coal mine in South Africa, a top company exec ...
Saturday, 18 July 09
REN POWER CZ COMMISSIONS ANOTHER PHOTOVOLTAIC POWER STATION
COALspot.com (Press Release): REN Power CZ, a company in the Czech Coal Group, has put into operation another photovoltaic power station. The plant ...
Saturday, 18 July 09
THE FUTURE FOR SUPRAMAX FOR NEXT 3 YEARS TILL 2012 WOULD BE AROUND US$ 13,500 PER DAY - CAPT. REDDY
COALspot.com ( Singapore): The market moved up sharply this week , which was quite unexpected.
The BDI was up by 557 which is an increase of 18 ...
Friday, 17 July 09
CHINA COAL-SPOT PRICES EDGE LOWER, SUPPLY APLENTY
China Mining reported that, spot prices in China's top coal shipping port Qinhuangdao edged lower from a week earlier, as supply grew, offsetting t ...
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- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- PTC India Limited - India
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Xindia Steels Limited - India
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
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