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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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Thursday, 18 June 09
INDIKA GETS APPROVAL ON PETROSEA ACQUISITION
PT Indika Energy, the country’s third-biggest miner, said on Wednesday that its shareholders had approved its plan to acquire an 81.95 percent ...
Thursday, 18 June 09
MORE FUNDS FOR COAL VIDESH ASSET BUY
The government plans to let Coal Videsh, a subsidiary of Coal India, have more than Rs 1,000 crore at its disposal to shop for assets abroad.
&ld ...
Wednesday, 17 June 09
MINE EXPLOSION'S DEATH TOLL HITS 30 - (UPDATE 1 )
Search and rescue workers have discovered the bodies of 30 miners who were killed in a coal mine explosion in the West Sumatra regency of Sawahlunto ...
Wednesday, 17 June 09
S.KOREA UTILITIES INK '09 COAL CONTRACTS WITH CHINA
* S.Korea to buy 3 mln tonnes of coal from China at $78.50/T
* Talks between individual power firms and miners ongoing
South Korean utilities ...
Wednesday, 17 June 09
MINE BLAST KILLS NINE, BURIES DOZENS
A major mine explosion near Sawahlunto city, West Sumatra, Tuesday, killed at least nine people while more than 30 were buried and are feared ...
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- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- VISA Power Limited - India
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Planning Commission, India
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
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