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