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