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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, 08 October 09
MINING TO ATTRACT $6B: BKPM
The Jakarta Post reported that, Indonesia’s mining sector could expect investment of up to US$6 billion in the 2010-2012 period, in part becau ...
Thursday, 08 October 09
INDIA DEMAND TO HELP DIRE COAL OUTLOOK - MACQUARIE
Reuters reported that, Macquarie Securities said on Wednesday its bearish short-term outlook on thermal coal may begin improving in a year's time o ...
Thursday, 08 October 09
ESSAR UNIT WINS INR 479 CR (US$ 103,272,401) ORISSA PROJECT
The firm will develop and operate the terminal at Paradip port; the contract will stretch up to 30 years
Live Mint reported that, Essar Shipping ...
Wednesday, 07 October 09
ESSAR, JINDAL IN TAKEOVER TUSSLE FOR AUSTRALIAN COAL MINER
Reuters reported that, Privately owned Essar Group has launched a surprise A$144.2 million ($128.1 million) bid for Australian coal minnow Rocklands ...
Wednesday, 07 October 09
ADARO SECURES $500 M LOAN
The Jakarta Post reported that, The country's second largest coal producer, PT Adaro Energy announced on Wednesday that it has secured US$500 milli ...
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- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Singapore Mercantile Exchange
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