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