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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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Thursday, 12 November 09
FOREIGN INVESTMENT IN RUSSIAN COAL SECTOR
Reuters reported that, Russia's coal mines, particularly in the Arctic and Far East, are attracting interest from foreign investors as commodity pr ...
Thursday, 12 November 09
BANPU TO INVEST US$ 466 M
Plan targets 33.5m tonnes of coal per year
Bangkok Post reported that, Banpu Plc, Asean's largest coal miner, is planning capital investments of ...
Wednesday, 11 November 09
NORTHSTAR TAKES 40 PER CENT OF INDONESIAN MINING COMPANY
AltAssets reported that, PT Northstar Pacific Partners, the Indonesian affiliate of US private equity firm TPG, has taken a 40 per cent stake in Ind ...
Wednesday, 11 November 09
INDONESIAN COAL MINERS SOLD BIG VOLUMES OF 2010 TO CHINA
* China has scooped up large volumes of Indonesian coal
* Total exports to China in 2010 seen to exceed 20 million T
* Chinese, Indian demand may ...
Wednesday, 11 November 09
INDIAN COAL IMPORT FROM SA IN OCTOBER
Reuters reported that India imported 2.4 million tonnes of coal from South Africa's Richards Bay Coal Terminal in October 2009, 35% of the total of ...
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- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- The University of Queensland
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Australian Coal Association
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
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