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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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Saturday, 13 February 10
COAL INDIA 2010/11 COAL IMPORTS TO JUMP - EXEC
Coal imports by state-run Coal India Ltd are likely to soar to 6-10 million tonnes in fiscal 2010/11 from an expected 1.5-1.7 million tonnes in the ...
Saturday, 13 February 10
RULES MAY FREE $10B OF MINING PROJECTS IN INDONESIA
The government announced on Friday that it had issued two implementing regulations for the new Mining Law that will clear the way for the developmen ...
Saturday, 13 February 10
INDONESIA OFFERS TAX INCENTIVES FOR RENEWABLE ENERGY
Indonesia is offering tax incentives to develop renewable energy projects, including geothermal energy, to cut dependency on fossil fuels, a decree ...
Friday, 12 February 10
MECHEL EYES 2010 COAL OUTPUT AT 28-29 MLN T
Russian steel and coking coal producer Mechel expects coal output to reach 28-29 million tonnes this year, returning to pre-crisis levels thanks to ...
Friday, 12 February 10
TATA POWER: QUARTERLY BLIP
Although the company’s revenues dipped in the December quarter, its long-term story is intact.
Lower power generation and realisations saw ...
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- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- White Energy Company Limited
- Minerals Council of Australia
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- The University of Queensland
- MS Steel International - UAE
- Australian Coal Association
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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