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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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- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
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- Australian Coal Association
- Price Waterhouse Coopers - Russia
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- The State Trading Corporation of India Ltd
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- Global Coal Blending Company Limited - Australia
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- Ministry of Mines - Canada
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- London Commodity Brokers - England
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- Trasteel International SA, Italy
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- Rio Tinto Coal - Australia
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- Minerals Council of Australia
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- Romanian Commodities Exchange
- Goldman Sachs - Singapore
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- Antam Resourcindo - Indonesia
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- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- The Treasury - Australian Government
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- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
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- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
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- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
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- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- VISA Power Limited - India
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- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
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- Independent Power Producers Association of India
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- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
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- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Economic Council, Georgia
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- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
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- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
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