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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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Tuesday, 12 May 09
BANPU'S PROFIT DOUBLES TO RECORD AFTER SALES JUMP - BLOOMBERG
BANPU Pcl, Thailand’s biggest coal producer, reported first-quarter profit more than doubled to a record after higher prices for the fuel boos ...
Tuesday, 12 May 09
COAL IN PLACE, GMR PLANS 2,000-MW THERMAL PLANT - BUSINESS-STANDARD
GMR ENERGY, a subsidiary of Bangalore-based infrastructure company GMR Infrastructure Ltd, is planning to set up a 2,000-Mw thermal power plant near ...
Monday, 11 May 09
SOUTH AFRICA PROBLEMS SLOW INDIA COAL BUYING - MINE WEB
Indian imports of South African coal are likely to be close to 12 million tonnes in 2009, up from 10 million last year.
Indian coal buyers were a ...
Saturday, 09 May 09
THE WEEK SAW BIT OF HECTIC ACTIVITY IN THE FREIGHT MARKET - VISTAAR SHIPPING
COALspot.com (Singapore) : VISTAAR Shipping Pte Limited, one of the experienced ship operator in Singapore, said, the week saw bit of hectic ac ...
Saturday, 09 May 09
CHINA PLANS TO BUILD COAL STOCKPILE BASES IN SHANDONG - BLOOMBERG
China, the world’s largest coal producer and consumer, plans to build stockpiles of the fuel in the eastern province of Shandong to ensure sup ...
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- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
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- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- White Energy Company Limited
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
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- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- The University of Queensland
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- Larsen & Toubro Limited - India
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
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- Bangladesh Power Developement Board
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- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
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- Wilmar Investment Holdings
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- Georgia Ports Authority, United States
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- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Australian Coal Association
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- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
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- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
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- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
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- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
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- GN Power Mariveles Coal Plant, Philippines
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- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
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- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Minerals Council of Australia
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- Videocon Industries ltd - India
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- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
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- Oldendorff Carriers - Singapore
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- Petron Corporation, Philippines
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- Mintek Dendrill Indonesia
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- Baramulti Group, Indonesia
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- PowerSource Philippines DevCo
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