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