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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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Saturday, 04 July 09
S. AFRICA'S RICHARDS BAY TO CAP NEW COAL VOLUMES, MININGMX SAYS
South Africa’s Richards Bay Coal Terminal is proposing restrictions on the quotas it awards to coal exporters from the so-called Phase 5 expansi ...
Saturday, 04 July 09
DALRYMPLE BAY COAL TERMINAL EXPANSION COMPLETE
BABCOCK & Brown Infrastructure has completed expansion of the Dalrymple Bay Coal Terminal (DBCT) near Mackay, Queensland.
The terminal is now ...
Friday, 03 July 09
CHINA SHENHUA TO DOUBLE COAL CAPACITY BY 2014-PAPER
China Shenhua Energy Co Ltd plans to double its annual coal production capacity by 2014 from this year's level, the China Securities Journal report ...
Friday, 03 July 09
UKRAINE CUTS COAL PRODUCTION 9.3 PERCENT IN H1
Ukraine reduced coal production approximately 9.3%, or by 3.673 million tonnes, to 35.879 million tonnes in the first half of 2009 compared to the s ...
Thursday, 02 July 09
PETCOKE BOOMS AS CEMENT MAKERS TRY TO REPLACE COAL
* Cement makers led by Asia chase petcoke to replace coal
* Petcoke prices up $10/T Feb-Jun, set to rise further
* Domestic U.S. petcoke demand ma ...
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- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Parliament of New Zealand
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
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