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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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Friday, 28 August 09
JSW MAY BUY AFRICAN MINE FOR US$ 350
The Economic Times Reported that, The Sajjan Jindal-owned JSW Group is in advanced talks to acquire a coal mine in Swaziland, Africa, at an estimate ...
Friday, 28 August 09
COAL INDIA ALLOWED TO IMPORT COKING COAL
The government Thursday allowed the state-owned Coal India to import coking coal and high grade ash thermal coal by acquiring coal properties abroad ...
Thursday, 27 August 09
CIL TO SPEND US$ 1 - 1.5 BN TO ACQUIRE ASSETS IN 4 COUNTRIES
Business Standard reported that, "Coal India is looking to spend $1-1.5 billion in acquiring mining assets in Australia, Indonesia, South Afric ...
Wednesday, 26 August 09
INDIA'S JSW TO DOUBLE JAIGARH PORT CAPACITY TO 20 MT
Sea Trade Asia reported that, JSW Jaigarh Port, a wholly owned subsidiary of JSW Infrastructure & Logistics, plans to double cargo handling capa ...
Wednesday, 26 August 09
JSW ENERGY NEARS COAL-SUPPLY LINKAGE DEAL IN INDONESIA
Sajjan Jindal-owned JSW Energy is close to finalising a coal-supply linkage pact in Indonesia and is also exploring options of acquiring ...
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- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Planning Commission, India
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- Australian Coal Association
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Economic Council, Georgia
- Central Electricity Authority - India
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
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