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