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