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