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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, 15 October 09
GOVT TO CAP COAL EXPORTS AT 150 MILLION TONS A YEAR
The Jakarta Post reported that, The government plans to cap coal exports at around 150 million tons a year in a bid to guarantee supply for domestic ...
Thursday, 15 October 09
AUSTRALIAN MINING COMPANIES REPORTED FINDING 1.5 BILLION COAL MINE DEPOSIT IN MOZAMBIQUE
Paguntaka reported that, Mozambique is a country that has the potential mining areas are very rich. Many mining companies who want to invest in the ...
Wednesday, 14 October 09
INDONESIA POWER FIRM SIGNS LOAN AGREEMENTS FOR OVER $1 BLN
Reuters reported that, Indonesia's state electricity firm PT Perusahaan Listrik Negara (PLN) has raised more than $1 billion from a group of banks ...
Wednesday, 14 October 09
LARSEN & TOUBRO MAY ENTER POWER GENERATION BUSINESS IN INDIA
Bloomberg reported that, Larsen & Toubro Ltd., India’s biggest engineering company, said it is considering entering the power generation b ...
Wednesday, 14 October 09
INDONESIA MULLS TO LIMIT COAL EXPORT
China View reported that, The Indonesian government planned to limit coal export of up to 150 million tons per year due to the growing coal demand i ...
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- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- Planning Commission, India
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
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