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