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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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Saturday, 05 September 09
INDIA BUYING INTO AUSTRALIA'S COAL - INTERVIEW
India is in line to buy vast amounts of Australian coal. An Indian cabinet minister is on a special mission to Australia to help satisfy India's ur ...
Saturday, 05 September 09
52 COMPANIES SUBMIT EOIS TO COAL INDIA
The Hindu, India's largest English news paper reported that, International mining majors from the U.S., South Africa, Australia and Indonesia are a ...
Friday, 04 September 09
INDONESIA PAITON ENERGY BUYS COAL FROM ADARO, KIDECO
PT Paiton Energy, an Indonesian independent power producer, has agreed to buy 3 million tonnes of coal from PT Adaro Energy Tbk (ADRO.JK) and PT Kid ...
Thursday, 03 September 09
ICVL IN TALKS FOR COAL BLOCKS IN INDONESIA
These acquisitions will help ICVL meet an internal target of importing at least 5 million tonnes (mt) of coking coal by 2012-13
LiveMint reported ...
Tuesday, 01 September 09
THREE COAL INVESTMENTS AND A SECTOR ON FIRE
With recession fears fading into the past in Asia and growth increasingly back on track in the West, global energy demand is again surging. It's no ...
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- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Baramulti Group, Indonesia
- Economic Council, Georgia
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- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- London Commodity Brokers - England
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- The University of Queensland
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
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