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