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