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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, 23 May 09
THE SPOT SUPRAMAX CONTINUED TO BE FIRM - VISTAAR SINGAPORE
COALspot.com (Singapore) : VISTAAR Shipping Pte Limited, an experienced ship operator from Singapore, said, the beginning of the week continued ...
Saturday, 23 May 09
INDONESIA'S COAL OUTPUT SLUMPS IN Q1 ON LOWER PRICES, FALLING DEMAND - THE JAKARTA GLOBE
Falling international coal prices, bad weather and other problems cut first-quarter coal output by 50 percent to 30 million tons against an initial ...
Saturday, 23 May 09
INDIAN GOVT PLANS TO BUILD FIVE COAL-BASED POWER PLANTS AT $3.5B TO END CRISIS - THE FINANCIAL EXPRESS
The government has started working on a plan to set up five coal-based power plants with combined capacity of 2,500 mega watt to solve the country' ...
Saturday, 23 May 09
INTERNATIONAL COAL VENTURES PVT LTD FORMED - INDIA SERVER
National Thermal Power Corporation Limited (NTPC Ltd), the largest thermal power generating company of India, has entered into a joint venture with ...
Friday, 22 May 09
CHURCHILL DOUBLES INDONESIAN COAL PROJECT RESOURCE ESTIMATE - STEEL GURU
Mining Weekly quoted Churchill Mining as saying that the resource at its East Kutai coal project in Indonesia has more than doubled to 3.18 billion ...
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- Malabar Cements Ltd - India
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Thai Mozambique Logistica
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Planning Commission, India
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
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