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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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Friday, 12 June 09
THERMAL COAL PRICE REMAINS STABLE IN SHANXI - STEEL GURU
It is reported that coming into June, no major changes are seen in coal supply-demand relations in Shanxi province. Statistics of Qinhuangdao port, ...
Thursday, 11 June 09
PT NALCO PLANS TO CONSTRUCT COAL-FIRED POWER PLANT IN SOUTH SUMATRA - ENERGY BUSINESS REVIEW
PT Nalco (National Aluminium Company Limited), an Indian-based company, plans to construct a coal-fired power plant in South Sumatra. The company in ...
Thursday, 11 June 09
COAL PRODUCERS TO SEE BOOST IN DEMAND FROM ASIA PACIFIC - JAKARTA POST
The Jakarta Post reported that, at the recent 15th Coaltrans conference in Bali, we noted concerns related to rising oil prices at a faster pace tha ...
Wednesday, 10 June 09
BHP TO CUT 450 JOBS AT INDONESIAN COAL PROJECT - REUTERS
Reuters reported that, BHP Billiton Ltd will lay off all 450 workers at its Indonesian coal project after deciding not to go ahead with the pr ...
Monday, 08 June 09
PTC INDIA TO ACQUIRE COAL MINES IN AUSTRALIA, INDONESIA - PTI NEWS
PTI reported that, State-owned Power Trading Corp today said it would acquire coal properties overseas and has identified mines in Australia and Ind ...
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- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- The University of Queensland
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- PTC India Limited - India
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Wilmar Investment Holdings
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