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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, 06 June 09
COAL PRICE HIT RECORD ON STRONG CHINA DEMAND - INVESTMENT WATCH
Investment watch reported that, “Coal price hit a new high of over $72 a tonne at Australia’s Newcastle Port, a benchmark for Asia, spur ...
Friday, 05 June 09
CEMENT INDUSTRY NEEDS POLICY ON FLY ASH
H.M. Bangur, President of Cement Manufacturers' Association, on the objectives and economic impact of the proposed national policy on utilisation o ...
Thursday, 04 June 09
PAKISTAN TO IMPORT MORE COAL FROM INDONESIA - SEATRADE
COALspot.com (Pakistan): Richards bay to Pakistan sea freight has touched US$ 20.00 for 40,000/10 pct steam size in June 2009. South African c ...
Thursday, 04 June 09
CHINA'S SHANXI PROVINCE CONSIDERS COAL FUTURES BOURSE - MINE WEB
Mine Web reported that, China hopes to establish a coal futures exchange to obtain more rights on international pricing.
China's largest coal pr ...
Thursday, 04 June 09
CHINA QINHUANGDAO COAL STOCK JUMPS BY 36.2% MOM - STEELGURU
SteelGuru reported that, Sources indicated that, coal stock at Qinhuangdao port, China's major coal port has reached 4.88 million tonnes increasing ...
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- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- MS Steel International - UAE
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Parliament of New Zealand
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- The University of Queensland
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
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