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