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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, 05 November 09
HMS BERGBAU AG OPENING INDIAN OFFICE
Further step on internationalization track Office in Mumbai Participation in demand for coal imports
HMS Bergbau AG, is an international coal tra ...
Thursday, 05 November 09
SAM'S SEAFOOD HOLDINGS MOVES STEP CLOSER TO COAL EXPLORATION IN INDONESIA
Sam’s Seafood Holdings Limited, which is proposed to be renamed Pan Asia Corporation Limited, is moving closer to becoming an exploration and ...
Wednesday, 04 November 09
INDONESIA CAP ON COAL EXPORTS MAY HIT INDIAN POWER SECTOR
BL reported that Karnataka power sector is likely to be partially impacted by the Indonesian Government move to restrict coal exports.
Private se ...
Wednesday, 04 November 09
SA 2010 COAL EXPORTS SEEN AT 65M TO 68M TONS - ANALYSTS
South Africa's thermal coal exports could rise to as high as 68 million tonnes in 2010 but are more likely to be 64-65 million compared to 60 milli ...
Wednesday, 04 November 09
BAKRIE MAY WIN BERAU COAL BID FROM ARMADIAN
The Bakrie group is likely to be selected as buyer of PT Berau Coal, the country’s fifth-largest coal producer, two people familiar with the m ...
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- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Australian Coal Association
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
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- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Parliament of New Zealand
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- PTC India Limited - India
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
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