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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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Saturday, 02 January 10
INDONESIAS COAL OUTPUT RISES BY 5%
Indonesia, Asia’s largest coal exporter, produced 254 million tons of coal in 2009, a 5.8 percent increase from 2008 and well ahead of the gov ...
Saturday, 02 January 10
TAIPOWER FORECASTS COAL DEMAND TO SNAP DECLINE
Taiwan Power Co., Asia's biggest importer of thermal coal, expects its demand for the fuel to rise in 2010 after falling for two years as the islan ...
Friday, 01 January 10
COAL INDIA TO START IMPORTING DIRECTLY
According to sources, the coal major has already finalised tender document to import four million tonnes thermal grade coal for supplies to NTPC. Th ...
Thursday, 31 December 09
INDONESIA SEES 2010 MINING INVESTMENT UP 39 PCT
Reuters reported that, Indonesian mining investment is expected to hit $2.5 billion next year, up from $1.81 billion in 2009, supported by greater c ...
Thursday, 31 December 09
YANDICOOGINA BECOMES FIRST MINE IN AUSTRALIA TO PRODUCE 50 MILLION TONNES A YEAR
COALspot.com Press Release: Rio Tinto's Yandicoogina, Australia's largest-producing iron ore mine, has broken the 50 million tonne mark for annual ...
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- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- The University of Queensland
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Planning Commission, India
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
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