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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, 16 June 09
INDIAN MINING WORKER ARRESTED IN BENGKULU
Forestry officials in Bengkulu Province, Sumatra, arrested one Indian national and two Indonesians on Sunday for unauthorized exploration in the ele ...
Tuesday, 16 June 09
INDIAN GOVERNMENT MAY ALLOW PRIVATE COMPANIES TO MINE COAL
The government is “strongly considering” to allow commercial coal mining by private companies in a bid to bridge the demand-supply gap, ...
Monday, 15 June 09
SAFRICA'S COAL TERMINAL EXPANSION DELAYED TO Q4
South Africa's Richards Bay Coal Terminal (RBCT) said on Monday the completion of a project to expand the export facility had been delayed to the f ...
Monday, 15 June 09
SHENHUA DENIES GIVING GROUND ON EXPORT COAL PRICE - REUTERS
China Shenhua Energy Co, the country's top coal producer, expects Japanese and South Korean clients to pay at least as much as Chinese customers fo ...
Monday, 15 June 09
POWER PLANT SUFFERS FROM COAL CRISIS - THE STATESMAN
The 3,000 mw NTPC-Kaniha power plant, the second biggest in the country, is facing an unprecedented coal crisis with stocks dipping to a low of only ...
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- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Australian Coal Association
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Videocon Industries ltd - India
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- The University of Queensland
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
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