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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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Wednesday, 14 October 09
SA'S COAL OUTPUT LIKELY TO RISE BY 2011, BOOSTED BY WATERBERG MINES
Mining weekly reported that, South Africa's coal production will struggle to meet demand over the next few years, but coal production could likely ...
Tuesday, 13 October 09
INDONESIA'S BAYAN SEES 2010 COAL OUTPUT UP 42 PCT
Reuters reported that, Indonesian coal miner PT Bayan Resources Tbk (BYAN.JK) said on Tuesday it expects its coal output to increase by 42 percent i ...
Tuesday, 13 October 09
STRAITS ASIA UPBEAT ON MEETING 2009 COAL OUTPUT
Reuters reported that, Singapore-listed coal miner Straits Asia is still optimistic about meeting its coal output target of 9 million tonnes this ye ...
Tuesday, 13 October 09
THERMAL COAL DEMAND IN CHINA DRIVES PRICE INCREASES
Metal Miner reported that, Thermal coal prices have been falling this year; contrary to many other commodities, both metals and energy that hit bott ...
Tuesday, 13 October 09
JSW ENERGY SCOUTING FOR PARTNERS, ACQUISITIONS
Business-Standard reported that, JSW Energy is planning to become an integrated power company by bringing in a partner for its transmission business ...
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- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- The University of Queensland
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- MS Steel International - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Parliament of New Zealand
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- London Commodity Brokers - England
- Planning Commission, India
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