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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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Wednesday, 27 May 09
EUROPEAN COAL PRICES FOR 2010 SETTLEMENT DROP TO 11-DAY LOW - BLOOMBERG
Benchmark European coal derivatives declined to an 11-day low as oil prices slumped.
Coal for delivery to Amsterdam, Rotterdam or Antwerp with se ...
Tuesday, 26 May 09
NEW MINING PERMITS TO BE OBTAINABLE WITHIN TWO WEEKS' TIME - MAJALAHTAMBANG
The Indonesian government is currently formulating a procedure for companies willing to obtain mining permits (IUP in its Indonesian abbreviation). ...
Tuesday, 26 May 09
KADIN CALLS FOR BIGGER RECOGNITION OF MINING SECTOR - MAJALAHTAMBANG
The Indonesian Chamber of Commerce and Industry (KADIN Indonesia) had called other sectors, particularly the forestry and the land administration se ...
Tuesday, 26 May 09
TUTICORIN PORT TO INVEST RS 700CR FOR COAL HANDLING FACILITIES
Business Standard reported that, The Tuticorin Port will develop coal handling facilities for state-run Neyveli Lignite Corporation (NLC) and Coasta ...
Monday, 25 May 09
MMTC TO IMPORT 12.5 MN TN COAL FOR NTPC
India's State-run trading firm MMTC Ltd will import 12.5 million tonnes of coal this fiscal for the country’s largest power producer, NTPC. M ...
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- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
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