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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, 20 July 11
ANTWERP RECEIVES THE CAPESIZE MG COURAGE
The deepening of the Western Scheldt has made the port of Antwerp easily accessible not only to Ultra Large Container Ships of over 10,000 TEU but a ...
Wednesday, 20 July 11
KALIMANTAN GOLD APPOINTS COMMISSIONER TO SUBSIDIARY
Kalimantan Gold Corporation Limited has announced the appointment of Dr. Bambang Setiawan as Commissioner (a senior advisor) to the Board of PT Kali ...
Wednesday, 20 July 11
CHALLENGER GETS TABANG PROJECT IUP PERMIT
COALspot.com - Challenger Deep Resources Corporation has been getting exploration permit or Izin Usaha Pertambangan (IUP) for its Tabang coal in Eas ...
Wednesday, 20 July 11
TCM COAL PROJECT IN SOUTH KALIMANTAN MOVES TO FINAL FEASIBILITY STUDY
COALspot.com - Pan Asia Corporation Ltd has executed a formal agreement with an underground mining group KOPEX to undertake a final feasibilit ...
Wednesday, 20 July 11
DRY BULK MARKET KEEPS ON FALLING ON SOFTENING CONDITIONS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market retreated to lower ground on Tuesday, as the industry’s benchmark, the BDI (Baltic Dry Index) fell to 1,330 points, down b ...
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- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Planning Commission, India
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Minerals Council of Australia
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