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