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