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