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