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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, 20 November 09
INDONESIAN CO PLANS JV WITH NAGARJUNA
Economic Times reported that, Infrastructure firm Nagarjuna Constructions Company (NCC) is set to form a joint venture with an Indonesian coal minin ...
Thursday, 19 November 09
S. KOREA TO BUY COAL FROM CHINA FOR US$ 85-90/T IN 2010
Head of one S. Korea power company on November 18 unveiled that S. Korea’s power companies may purchase coal from China at the contract price ...
Thursday, 19 November 09
SNAPSHOT OF INDONESIA'S COAL INDUSTRY - FACT BOX BY REUTERS
Indonesian plans to cap coal exports to meet domestic demand will not hit global supplies in the near term, but could start to bite in three to five ...
Thursday, 19 November 09
INDONESIA COAL EXPORTS CURB WILL TAKE TIME TO BITE
Indonesia's plans to cap coal exports to satisfy demand at home are unlikely to crimp global supplies for as long as five years, when new power pla ...
Thursday, 19 November 09
THE GOVERNMENT TO GUARANTEE COAL SUPPLIES FOR POWER PLANTS
The government guarantees coal supplies for power plants under a 10,000 MW-capacity power plant construction acceleration program.
Minister of En ...
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- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Australian Coal Association
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
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