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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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Friday, 22 January 10
ENERGY ADVISORY COUNCIL MULLS - COAL EXPORT BAN
The National Energy Council, which advises the House of Representatives and the president on energy issues, has begun to debate a proposal to ban ex ...
Friday, 22 January 10
MERCATOR EYES MORE COAL MINES IN INDONESIA
India’s second-largest private shipping company Mercator Lines is looking at acquiring more coal mines in Indonesia as part of its strategy&nb ...
Friday, 22 January 10
BHAKTI ENERGI IN TALKS OVER COAL VENTURES IN KALIMANTAN
PT Bhakti Energi Persada, one of Indonesia’s biggest miners of brown coal, revealed on Thursday that it was in talks to form a joint venture w ...
Friday, 22 January 10
SHENHUA ENERGY 09 YIELDED 210MN TONS COMMODITY COAL
China Shenhua Energy Co., Ltd. yielded 210 million tons of commodity coal in 2009, hiking 13.2% year on year, the Chinese energy titan announced tod ...
Friday, 22 January 10
JSW ENERGY TO INVEST RS 4,500 CRORE IN COAL MINES ABROAD
The Sajjan Jindal-promoted JSW Energy is planning an investment of Rs 4,500 crore (US$ 978,260,869) to acquire coal mines abroad and another of Rs 1 ...
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- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Planning Commission, India
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
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