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