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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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Friday, 04 December 09
JSW ENERGY TO BUY OUT PARENT FIRM'S COAL BLOCK
JSW Energy plans to buy the stake held by JSW Steel in a thermal coal block in Mozambique in an attempt to become an integrated energy company with ...
Thursday, 03 December 09
JAPAN 2010 COAL IMPORTS SEEN FLAT, INDIA'S ROBUST - INDUSTRY
* Japan's demand seen steady in 2010 at 110 mln tonnes
* India's demand seen as robust, at 70 mln tonnes
Reuters reported that, Thermal coal i ...
Thursday, 03 December 09
INDONESIA MAY ALLOW COAL SALES BELOW GOVT PRICE
Reuters reported that, Indonesia is considering giving producers some flexibility to sell coal below the government's monthly benchmark price to co ...
Thursday, 03 December 09
INDONESIA SEEKS TO INCREASE COAL SHIPMENTS TO INDIA, CHINA
Bloomberg reproted that, Indonesia, Asia’s biggest coal exporter, seeks to increase shipments to India and China as the economies improve and ...
Thursday, 03 December 09
COAL INDIA IPO LIKELY TO HIT MARKETS BY NOVEMBER 2010
Soon investors will get to own a slice of India's largest coal mining company. Coal India its initial public offering will hit markets in November ...
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- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Marubeni Corporation - India
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Agrawal Coal Company - India
- MS Steel International - UAE
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
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