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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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Saturday, 31 October 09
FLSMIDTH WINS MAJOR INDIAN COAL HANDLING PROJECT
Top global supplier of minerals processing and materials handling equipment, FL smidth, has won another important coal handling contract in India
...
Saturday, 31 October 09
INDIA OPENING POWER SECTOR TO PRIVATE INVESTMENT, COAL STILL THE FUEL OF CHOICE
Energy Tribune reported that, With coal-fired power plants as the primary source, India’s electricity generation sector space has been dominat ...
Friday, 30 October 09
MINERS TOLD TO SPEND ON LOCAL SERVICE FIRMS
The energy and mineral resources ministry has issued a ministerial regulation ordering mining firms to prioritize hiring domestic service companies ...
Friday, 30 October 09
TATA POWER MAY BUY COAL FROM RIVERSDALE'S MOZAMBIQUE MINES
Bloomberg reported that, Tata Power Ltd., India’s biggest electricity generator outside state control, may buy coal from a mine in Mozambique ...
Thursday, 29 October 09
MMTC AWARDED 12.5 MILLION TONS TO THREE INDIAN TRADERS
COALspot.com (India): State-run trading firm MMTC awarded tenders for the import of 12.5 million tonnes of coal for NTPC to three Indian coal trader ...
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- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
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- PTC India Limited - India
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
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- Therma Luzon, Inc, Philippines
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- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Indian Oil Corporation Limited
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- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
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- Kideco Jaya Agung - Indonesia
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- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Minerals Council of Australia
- Planning Commission, India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
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- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
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- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Australian Coal Association
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
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- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
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- Malabar Cements Ltd - India
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
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- India Bulls Power Limited - India
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