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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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Tuesday, 29 December 09
PROFIT IN COAL INDUSTRY DOWN 9.4% Y-O-Y IN JAN.- NOV.
In November, China's coal production was 289mln tons, up 26.3% year on year, an increase of 5.2% over last month. China's average daily trucks loa ...
Tuesday, 29 December 09
DHARMA HENWA EYES 20% REVENUE GROWTH
Local integrated mining services provider PT Dharma Henwa, which was earlier this year acquired by coal mining giant PT Bumi Resources, expects reve ...
Monday, 28 December 09
NEED TO IMPORT COAL COMES EARLY
Viet Nam may need to start importing coal as early as 2012, three years earlier than expected, to meet its electricity demands.
The Viet Nam Coal ...
Monday, 28 December 09
GOVT EYES $3.57B MINING, GEOTHERMAL INVESTMENT
The country can expect up to US$3.57 billion in investment in mining and geothermal energy next year, which would represent an increase by more than ...
Monday, 28 December 09
INDONESIAN MINER LINKED TO FUGITIVE FINANCIER
The Energy Ministry is unlikely to approve the transfer of ownership of coal miner PT Riau Baraharum on allegations it is indirectly owned by fugiti ...
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- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- White Energy Company Limited
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Minerals Council of Australia
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- The University of Queensland
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
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