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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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Tuesday, 25 August 09
INDIAN FIRM TO INVEST $44 MN IN INDONESIA
Economic Times - India Times reported that, BEML Limited, India-based second largest heavy equipment producer in Asia, will invest $44 million in In ...
Tuesday, 25 August 09
BHARAT LOOKS TO BULLDOZE RIVALS WITH LOWER PRICES
The Jakarta Globe reported that, The country’s two established heavy equipment suppliers now have a competitor in the form of Indian firm Bhar ...
Tuesday, 25 August 09
PIKE RIVER DELAYS COAL EXPORTS FROM NEW ZEALAND MINE
South African mining Weekly reported that, The first 60,000-t export shipment from ASX-listed Pike River Coal’s new mine has been delayed unti ...
Monday, 24 August 09
INDONESIAN GOVT ASKED TO CONTROL COAL TRADERS, BROKERS
The Jakarta Post, the leading English news paper in Indoneisa reported that, Businesses are urging the government to bring all coal traders and brok ...
Monday, 24 August 09
10,000 MW TO BE GENERATED THROUGH THAR COAL RESERVES BY 2020
Four projects of 2450 MW approved; govt to invest Rs80bn in five years on infrastructure
The News Pakistan reported that, The Thar Coal a ...
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- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- The University of Queensland
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
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