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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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Monday, 27 April 09
JSW ENERGY SET TO SNAP UP AFRICAN COAL MINE FOR $70 MN - ECONOMIC TIMES
Sajjan Jindal-led JSW Energy is close to acquiring a sub-Saharan African thermal coal mine, which has reserves of more than 200 million ...
Monday, 27 April 09
INDONESIA MINING RULES MAY DETER INVESTORS-OFFICIALS - REUTERS
Indonesia's rules on foreign divestment of mining projects must be revised to address issues such as finding buyers if Southeast Asia's biggest ec ...
Monday, 27 April 09
UNDERGROUND MINING IN FOREST AREAS NOT SO SIMPLE - THE JAKARTA POST
The government's plan to issue a presidential decree allowing mining companies to mine underground in protected forest concession areas has resulte ...
Monday, 27 April 09
COAL PRICES ABOVE FUNDAMENTALS - STUFF.CO.NZ
Coal prices have defied the gravity of fundamental factors, supported by stockpiling prompted by cheaper prompt prices rather than a reflextion of a ...
Sunday, 26 April 09
MITRA HOPES TO SECURE DEALS WITH TWO COAL FIRMS BY JUNE - THE JAKARTA POST
An integrated oil and gas services company, publicly listed PT Mitra Rajasa, is expecting to seal acquisition deals with two coal companies in June, ...
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- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Planning Commission, India
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Minerals Council of Australia
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- MS Steel International - UAE
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
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