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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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Friday, 26 March 10
CHINA PLANS TO INCREASES IMPORT COAL GREATLY IN 2010
– Asia Pacific Coal Trading & Investment Outlook 2010-
COALspot.com (Press Release): China plans to increase coal import significantly ...
Friday, 26 March 10
NTPC IN TALKS FOR INDONESIAN MINE - LIVE MINT
The deal for the coal mine with 1.8 bn tonnes of reserves may be valued at $1 bn
Live Mint reported that, State-run power utility NTPC Ltd is in ta ...
Friday, 26 March 10
ESSAR GROUP SIGNS DEAL FOR INDONESIAN COAL MINE - BUSINESS LINE
Looking ahead
The coal from the Indonesian mine would provide raw material to the group's power projects
The Aries coal mines acquired by the gro ...
Thursday, 25 March 10
CHINA RAILWAY WINS $4.8 BILLION INDONESIA PROJECT - BLOOMBERG
Bloomberg reported that, China Railway Group Ltd. won a $4.8 billion order from PT Bukit Asam, Indonesia’s state-owned coal producer, for a co ...
Thursday, 25 March 10
INDIAS MAHARASHTRA SEEKS TO IMPORT 3.35 MILLION TONS OF COAL - BLOOMBERG
Bloomberg reported that, Maharashtra State Power Generation Co., a provider of electricity to India’s commercial hub Mumbai, is seeking 3.35 m ...
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- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
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