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