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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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Tuesday, 30 June 09
ARCELORMITTAL, RIO, 8 OTHERS VIE FOR COAL INDIA MINES
Coal India Ltd. short-listed ArcelorMittal, Rio Tinto Group and eight other companies to develop its abandoned mines to help ease a shortage of coal ...
Monday, 29 June 09
INDONESIA PLANS 20 PCT FOREIGN MINING SALE LAW
Indonesia plans to require foreign investors in mining firms to gradually divest shares starting from the fifth year of commercial production, but m ...
Monday, 29 June 09
CHINA ENJOYS STABLE COAL ECONOMY IN THE FIRST FIVE MONTHS OF 2009
In the first five months of the year, China's raw coal production had continued to rise, and coal market stayed in a balance in terms of supply-dem ...
Monday, 29 June 09
GOVERNMENT FINE TUNES MINING LAW
The government is planning to require all foreign-owned mining companies to divest 20 percent of their businesses to local entities after five years ...
Sunday, 28 June 09
INDIA CEMENTS TO INVEST RS 1,500 CR OVER 2 YEARS
Chennai-based India Cements is planning to invest around Rs 1,500 crore over the next two years for setting up a greenfield project in Rajasthan, po ...
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- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
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