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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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Monday, 05 October 09
SOUTH AFRICAN COAL RISES ON INDIAN BUYING, DOMESTIC DEMAND
Bloomberg reported that, Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the f ...
Monday, 05 October 09
BANPU EYES INCREASE IN COAL OUTPUT
The Nation reported that, Banpu plans to boost its coal output to 23 million tonnes next year once production begins at the East Block of its Indomi ...
Monday, 05 October 09
COAL TRADING C&O TO INVEST $100 M NEXT YEAR
The Jakarta Post reported that, Coal and Oil (C&0) Group of India plans to invest up to US$100 million in Indonesia next year to acquire coal mi ...
Sunday, 04 October 09
INDONESIAN COAL EXCHANGE FOR PRICE BENCHMARKING IN OFFING
Reuters cited Mr Bob Kamandanu chairman of the Indonesian Coal Producers Association as saying that Indonesia plans to set up a coal exchange to cre ...
Sunday, 04 October 09
GRASIM TO CONSOLIDATE CEMENT BIZ
The Statesman reported that, India's largest cement producer Aditya Birla group today said it would consolidate its cement businesses by merging Gr ...
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- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- Planning Commission, India
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Australian Coal Association
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
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