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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, 17 July 09
THE NEW LAW OF MINERAL AND COAL MINING NO 4/2009 CREATE CONDUCIVE CLIMATE OF INVESTMENT IN INDONESIA
COALspot.com (Indonesia): The new Law of Mineral and Coal Mining No 4/2009, which replaces the old mining law No. 11/1967 has been signed by the Pre ...
Friday, 17 July 09
INDIA COAL TRADERS MUST OWN POWER, MINES - C&O BOSS
· Coal traders need to diversify to grow
· Coastal Energen to build first merchant power plant
· Tamil Nadu to see st ...
Friday, 17 July 09
CHINA SHENHUA ENERGY'S COAL OUTPUT SWELLS 17.6% IN H1
China Knowledge reported that, China Shenhua Energy Co Ltd, which is engaged in the coal mining, power generation and transportation businesses, on ...
Thursday, 16 July 09
CHINA ISSUES SECOND BATCH OF '09 EXPORT QUOTAS
China has issued 25 million tonnes of coal export quotas for the second batch this year, the National Development and Reform Commission said Wednesd ...
Thursday, 16 July 09
NTPC TO ENGAGE BANKERS TO ACQUIRE OVERSEAS COAL MINES
The Hindu reported that, State-run power generation company NTPC said it would appoint merchant bankers next month for acquiring coal mines identifi ...
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- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
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