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