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