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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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Tuesday, 16 February 10
KPMG PENS 6-POINT STRATEGY FOR COAL INDIA RESTRUCTURING
Coal India Ltd (CIL) has appointed KPMG Advisory Services Pvt Ltd to advise on consolidating its position as the country’s prime energy provid ...
Monday, 15 February 10
MINING LAW TO BE REVISED
Law No. 4 of 2009 on mineral and coal mining will be revised after a working visit of the Bangka Belitung (Babel) Provincial legislative assembly (D ...
Monday, 15 February 10
EURO COAL PRICES SOFTEN AS CHINESE LUNAR NEW YEAR HOLIDAYS START
Prices of prompt cargoes of coal for delivery into Europe weakened last week on a lack of European demand and market nerves over the possible impact ...
Monday, 15 February 10
INDONESIAN COAL SUFFERS SETBACK AS SUMATRA RAIL LINE HELD UP AGAIN
State-owned coal miner PT Tambang Batubara Bukit Asam’s $1.06 billion rail project in Sumatra faces more delays, and the cost of the project i ...
Monday, 15 February 10
MEC INFRA TO COMMISSION INDONESIA RAIL PROJECT
A joint venture between Ras Al Khaimah Investment Authority (Rakia) RAK Investment Authority and Minerals Energy and Commodities Holdings, a f ...
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- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Australian Coal Association
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Planning Commission, India
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
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