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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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Tuesday, 08 September 09
INDONESIA OFFERS AN OPPORTUNITY TO INDIANS
Meri News reported that, Indonesia is all set to launch the country's second 10,000 MW accelerated power expansion programme. The new power develop ...
Tuesday, 08 September 09
BUKIT ASAM AIMS 14 MLN TONS COAL PRODUCTION
VIVA News reported that, The rise in coal production is mainly triggered by the step-up in domestic demand.
Coal mining company PT Tambang Batuba ...
Tuesday, 08 September 09
MERCHANT BANKERS ADVISE CIL ON INDONESIAN MINE BUYS
Business Standard reported that, State-owned Coal India Ltd (CIL) is being advised by four to five merchant bankers on acquisition of coal assets in ...
Tuesday, 08 September 09
THE 3RD ASIA PACIFIC COAL TRADING & INVESTMENT OUTLOOK 2009 - PRESS RELEASE
The 3rd Asia Pacific Coal Trading & Investment Outlook 2009
Analysis of Asia Coal Market amid Global Financial Crisis
COALspot.com(Chin ...
Tuesday, 08 September 09
SOUTH AFRICAN COAL EXPORTS MAY RISE ON SALES TO INDIA
Bloomberg reported that, South African coal exports may rise to 100 million metric tons a year by 2020 and India may become the biggest destination ...
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- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- White Energy Company Limited
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
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