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