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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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Monday, 01 June 09
LAHAT RELIES ON COAL FOR GROWTH
Lahat regency in South Sumatra spans 6,618.27 square kilometers, encompasses 19 districts and covers 528 subdistricts and villages. It is inhabited ...
Monday, 01 June 09
LANDED COST OF IMPORTED COAL HAS INCREASED BY 10 - 15% COMPARE TO EARLY THIS YEAR - PAKISTAN TRADERS
COALspot.com (Pakistan): Due to visiting non commercial vessels occupied commercial berths in Karachi port, coal carrying vessels were sufferi ...
Monday, 01 June 09
LAHAT RELIES ON COAL FOR GROWTH - THE JAKARTA POST
Lahat regency in South Sumatra spans 6,618.27 square kilometers, encompasses 19 districts and covers 528 subdistricts and villages. It is inhabited ...
Saturday, 30 May 09
THE CHINESE IMPORTS OF IRON ORE,COAL AND NICKEL ORE SEEMED TO BE STEADY - VISTAAR SINGAPORE
COALspot.com (Singapore): VISTAAR Shipping Pte Limited, an experienced ship operator from Singapore,said, the Baltic index rally continued this week ...
Saturday, 30 May 09
COAL INDIA SIGNS FUEL SUPPLY AGREEMENT WITH NTPC - SINDHTODAY
India’s largest coal miner Coal India Friday inked a much-awaited fuel supply agreement (FSA) with power generation major NTPC Ltd.
In the ...
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- Iligan Light & Power Inc, Philippines
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
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- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
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- Sinarmas Energy and Mining - Indonesia
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- Attock Cement Pakistan Limited
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- Commonwealth Bank - Australia
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- Kumho Petrochemical, South Korea
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- Thai Mozambique Logistica
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- Tata Chemicals Ltd - India
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- Indonesian Coal Mining Association
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- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
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- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
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- Cement Manufacturers Association - India
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- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Romanian Commodities Exchange
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- Tamil Nadu electricity Board
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- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
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- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
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- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
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- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
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- London Commodity Brokers - England
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
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- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
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- Latin American Coal - Colombia
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- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Independent Power Producers Association of India
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
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- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
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- Singapore Mercantile Exchange
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
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- The Treasury - Australian Government
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- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
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- Petron Corporation, Philippines
- Medco Energi Mining Internasional
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- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
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- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
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- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
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- Price Waterhouse Coopers - Russia
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