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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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Wednesday, 12 August 09
COAL INDIA TO IMPORT 4 MLN T 2009/10 - MEDIA
State-run Coal India Ltd plans to directly import 4 million tonnes of coal in the current fiscal year to March 2010, Chairman Partha Bhattacharyya s ...
Wednesday, 12 August 09
CHINA'S LARGEST COAL PRODUCER TO SET UP COAL RESERVES
China's National Development and Reform Commission has commissioned China Shenhua Energy Co., the nation's largest coal producer, to build 10 stor ...
Wednesday, 12 August 09
NALCO SMELTER CONSTRUCTION MAY FACE DELAY
The Jakarta Post reported that, India’s state-run National Aluminum Company (Nalco) may postpone the construction of an aluminum smelter in In ...
Wednesday, 12 August 09
COAL MINE PLAN SHOT DOWN OVER GREEN CONCERNS
The Times of India reported that, In a major setback to Adani Powers, the principal chief conservator of forests (PCCF) has rejected its proposal fo ...
Tuesday, 11 August 09
INDONESIA'S COAL EXPORTS TO INDIA WILL BE EXEMPTED FROM DUTIES STARTING JANUARY 1, 2013 - BERITA SORE
Berita sore reported that, ASEAN is scheduled to sign a long-awaited Free Trade Agreement (FTA) with India in Bangkok on Thursday aimed at boosting ...
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- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Central Electricity Authority - India
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Planning Commission, India
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- PTC India Limited - India
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
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