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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, 24 October 09
ADANI, MMTC IN RACE TO SUPPLY COAL TO GSECL
Business-Standard reported that, as many as five companies are in fray to supply 15 lakh (1.5 million) metric tonnes of non-coking steam (ther ...
Saturday, 24 October 09
INDONESIA STATE POWER FIRM PLANS TO DELAY COAL SUPPLIES
Indonesia's state-controlled electricity company is negotiating with two coal producing firms to delay plans to supply coal to a power plant in Wes ...
Friday, 23 October 09
MONGOLIA LISTS 8 POTENTIAL BIDDERS FOR COAL PROJECT
Reuters reported that, Mongolia has shortlisted eight potential partners for its huge Tavan Tolgoi coking coal project, according to Temuulen Ganzor ...
Friday, 23 October 09
2010 WILL BE 'BRIDGE YEAR' FOR COAL - CONSOL CHIEF
Mining Weekly reported that, After a difficult 2009, 2010 will likely be a “bridge” year for the US coal industry, followed by improved ...
Friday, 23 October 09
INDIAN GROUP INTERESTED IN MOZAMBICAN COAL
Mining Weekly reported that, India’s leading steelmaker, the Steel Authority of India Limited (Sail), has confirmed that it is seeking to acqu ...
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- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Marubeni Corporation - India
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
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