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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, 29 October 09
COAL OF AFRICA SEES VELE OUTPUT BY APRIL 2010
* First coal from Mooiplaats mined and sold
* Talks with Transnet on rail PPP on track
Reuters reported that, Coal of Africa (CoAL) said on Mond ...
Thursday, 29 October 09
UAE FUND EYES INDIA POWER FOR INDONESIAN COAL
Reuters reported that, the UAE's Middle East Coal (MEC) is in talks to buy equity stakes in India's power plants in exchange for long-term coal su ...
Thursday, 29 October 09
CESC POSTS RS 126 CRORE (US$ 26,655,178) NET PROFIT IN QUARTER TWO
Economic Times reported that, Energy major CESC posted a marginal increase in net profit at Rs 126 crore (US$ 26,655,178) for the quarter ended Sep ...
Thursday, 29 October 09
INDIA MMTC TENDER SET TO BOOST S.AFRICA COAL
The South African coal market is set to be boosted further by India's state-owned trading firm MMTC Ltd's tender for 12.5 million tonnes, Indian t ...
Thursday, 29 October 09
INDIA CEMENTS SET TO ACQUIRE COAL MINE IN INDONESIA
Business-Standard reported that, India Cements is set to acquire a coal mine in Indonesia for around $20 million (around Rs 100 crore). The company ...
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- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Australian Coal Association
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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