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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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- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Australian Coal Association
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- The University of Queensland
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- White Energy Company Limited
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
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