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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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Thursday, 04 February 10
NO AMDAL, NO COAL MINING IN KALIMANTAN: MINISTRY
To prevent further environmental damage, the government has said it would revoke the licenses of mining firms operating in Kalimantan that do not ha ...
Thursday, 04 February 10
ANTICIPATING DOMESTIC COAL DEMAND
Indonesia has an abundant amount of coal reserves, which in 2008 is estimated at 7,12 billion tones. Coal production in 2008 reached 231,18 mi ...
Wednesday, 03 February 10
CHINA'S MAIN COAL PRICES FALL AS WINTER DEMAND EASES
Weekly coal prices at China's Qinhuangdao port, a benchmark in the world's biggest producer and consumer of the fuel, fell for the first time in s ...
Wednesday, 03 February 10
NEWCASTLE COAL EXPORTS RISE 3%; SHIP QUEUE SHORTENS
Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, increased 3 percent last week while the ...
Wednesday, 03 February 10
INDONESIA BUKIT ASAM SEES DOUBLE DIGIT 2010 REV GROWTH
* 2009 net profit rose an estimated 50 pct
* Sees opportunities for overseas acquisitions
Indonesian state-owned coal miner Bukit Asam saw 2009 ...
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- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Latin American Coal - Colombia
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- MS Steel International - UAE
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
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