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