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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, 27 June 09
HEAVY CONGESTION AT AUSTRALIAN PORTS REACHING ALL TIME HIGH TO 120 SHIPS IN EAST COAST AUSTRALIA - VISTAAR SHIPPING
COALspot.com (Singapore): The market this week was a bit soft and the BDI was down by almost 10 pct and closed at 3,703 points.
The drop in BDI i ...
Friday, 26 June 09
INDONESIA INVESTORS EYE BHP BILLITON COAL PROJECT
About four Indonesian investors are interested in taking over a coal project owned by BHP Billiton Ltd, a senior government mining official said.
...
Friday, 26 June 09
SOUTH AFRICA'S CONSULTING GROUP OPENS OFFICES IN CHINA, INDONESIA
Consulting engineering company SRK Consulting has opened new offices in Asia to cope with the growing demand for its services in the region.
The ...
Friday, 26 June 09
RUSSIA MECHEL TO DELIVER 2 MLN T COKING COAL TO ASIA
Russian steel and coal producer Mechel said on Thursday it had signed contracts to deliver about 2 million tonnes of coking coal concentrate to unna ...
Friday, 26 June 09
SA COAL EXPORTS UNLIKELY TO BREACH 65MT THIS YEAR
Coal volumes railed to South Africa’s Richards Bay Coal Terminal (RBCT) during the rain-affected first quarter of 2009 had fallen well short o ...
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- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- GMR Energy Limited - India
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
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