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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, 23 June 09
NAPOCOR TO RE-TENDER FOR 195,000 T COAL IN JULY
Electricity producer National Power Corp. (Napocor) will hold a tender on July 15 to buy 195,000 tons of steam coal for its Sual power station, the ...
Monday, 22 June 09
ONE DIES IN KUTAI COAL TUNNEL COLLAPSE
The Jakarta Post reported that, A tunnel at a coal mine belonging to company PT Fajar Bumi Sakti in Kutai Kartanegara, East Kalimantan collapsed on ...
Monday, 22 June 09
THIS WEEK IS EXPECTED TO BE FIRM AND DEMAND OF SHIPS WOULD BE STRONG - VISTAAR SINGAPORE
COALspot.com (Singapore): The BDI up by 487 points over last week which is an increase of almost 13 pct. The increase is again mainly due to Ca ...
Monday, 22 June 09
CHINESE MAY COAL IMPORTS HIT RECORD 9.43 MILLION TONNES
Reuters quoted Custom Data showed that China's coal imports hit an all-time record of 9.43 million tonnes in May.
The figure surpasses the previ ...
Monday, 22 June 09
SOUTH AFRICAN EXPORT COAL DECLINES ON WEAKENING EUROPEAN DEMAND
Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the fuel, posted the first dro ...
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- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- VISA Power Limited - India
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Planning Commission, India
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
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