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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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Thursday, 18 March 10
COAL PILING UP AT EAST COAST PORTS ON RAKE SHORTAGE
Business Line reported that, more than three million tonnes (mt) of imported coal are awaiting evacuation at the east coast ports of Paradip, Visakh ...
Tuesday, 16 March 10
INDONESIA ROUND VOYAGES WERE GETTING BETWEEN HIGH TEENS - BRS
Another strong week for the bulk market and rates in all segments are now back above pre-Chinese New Year levels. Atlantic volumes remain robust, an ...
Tuesday, 16 March 10
MADHUCON GETS MINING LICENSE IN INDONESIA
Business-Standard reported that, PT Madhucon Indonesia, a subsidiary of the Hyderabad-based infrastructure company Madhucon Projects Ltd, has been g ...
Monday, 15 March 10
BOB KAMANDANU ON INDONESIAS PEAK COAL PRODUCTION, ENERGY SECURITY AND EXPORTS TO INDIA
Bob Kamandanu, the chairman of Indonesian Coal Producers Association (APBI), said the country has an estimated 50 to 70 years of coal reserves.
T ...
Monday, 15 March 10
CIL BOARD CLEARS 10 PROPOSALS FOR STRATEGIC PARTNERSHIP OR JVS
Economic Times reported that, Towards achieving a global footprint, state-owned Coal India (CIL) is eyeing strategic partnership or joint ventures w ...
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- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- Australian Coal Association
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
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