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