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