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