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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, 26 May 10
ADANI GROUP EYES AFRICA FOR COAL MINING PROJECTS
India Info Line reported that, After acquiring coal mines for importing Indonesian coal to run its thermal power plants in the country, the Adani Gr ...
Wednesday, 26 May 10
DRY BULK MARKET SHOOTS UP, CLOSES IN ON POST-CRISIS ERA HIGHS
In an opposite trend than that of the previous week, the Baltic Dry Index (BDI), a benchmark for tracking costs to haul commodities at sea, shot up ...
Wednesday, 26 May 10
BUMI TO CUT UP TO USD 1 BILLION DEBT IN 12 MONTHS
Press Release : PT Bumi Resources Tbk. announced yesterday that it has revived its intent to issue non preemptive shares and added this to the agend ...
Tuesday, 25 May 10
COAL PRODUCTION MAY REACH 320 MILLION TONS THIS YEAR - THE JAKARTA POST
The Jakarta Post reported that, Indonesian coal miners expect to produce as much as 320 million tons of coal this year, an increase of nearly 7 perc ...
Tuesday, 25 May 10
KALIMANTAN COAL RAIL PROJECT RUNS INTO COST DELAY - THE JAKARTA GLOBE
The Jakart globe reported that, A$1.5 billion coal rail and port project planned for Central Kalimantan may be delayed by a year after a review of t ...
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- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- PTC India Limited - India
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Planning Commission, India
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Parliament of New Zealand
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- The University of Queensland
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
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