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