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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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Wednesday, 20 January 10
NALCO SEEKS CONSULTANT FOR $4 BILLION INDONESIAN SMELTER, PLANT
National Aluminium Co., India’s second-biggest producer of the metal, called for bids for a consultant on its proposed aluminum smelter and co ...
Wednesday, 20 January 10
NTPC PLANS TO SET UP ARM FOR ACQUIRING COAL ASSETS ABROAD
NTPC, the world’s second-largest independent power producer (IPP), plans to set up a new entity for acquiring coal assets abroad to secure fue ...
Wednesday, 20 January 10
CEMENT FIRMS TO BUY POWER PLANT COAL ASH
CEBU, Philippines - Cement companies in Cebu are interested to buy the coal ash that will be produced from the coal-fired power plant in Toledo City ...
Tuesday, 19 January 10
CHINA TO INCREASE THERMAL COAL IMPORTS - WEN
China's Premier Wen Jiabao said on Tuesday that China will appropriately increase imports of thermal coal to ease the country's power shortages.
...
Tuesday, 19 January 10
CESC TO BUY 100,000 MT OF INDONESIAN SUB BITUMINOUS COAL
COALspot.com (India): CESC, India’s one of the largest and oldest private power producer is expected to issue a closed tender any time this we ...
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- Central Java Power - Indonesia
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Parliament of New Zealand
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- White Energy Company Limited
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
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