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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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- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- The University of Queensland
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
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