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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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Wednesday, 04 November 09
BINANI HOPES TO BUY INDONESIAN COAL MINE IN 2-3 MONTHS
"We are still negotiating, but hope to conclude the deal in the next two to three months," Binani Cement Managing Director Vinod Juneja to ...
Tuesday, 03 November 09
CHINA TO BE NET COAL IMPORTER IN 2009
China is accelerating its importation of coal to cope with fallen output caused by the consolidation of small coalmines, and is likely to become a n ...
Monday, 02 November 09
RIO TINTO WARNS ON CHEAP MONGOLIAN COAL
The Age reported that, Mining giant Rio Tinto has warned that cheap coal from Mongolia as well as congestion at the Port of Newcastle in NSW could u ...
Monday, 02 November 09
ESSAR SEEKS COAL ASSETS IN SOUTH AFRICA
Paguntaka reported that, Essar Group plans to acquire coal assets in South Africa to help boost its power business in India. A senior executive of E ...
Sunday, 01 November 09
MINES REGULATION AMENDMENT BILL TO BE TABLED IN PARLIAMENT
Thaindia News reported that, A bill seeking to amend the Mines and Minerals Development Regulation Act, 1957, will be introduced in the winter sessi ...
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- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Bhatia International Limited - India
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- PTC India Limited - India
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
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