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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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Saturday, 25 April 09
KPC DEVELOPS EAST KALIMANTAN WITH GOVT - THE JAKARTA POST
Kaltim Prima Coal (KPC) focuses on several areas in its CSR projects to help the government increase the welfare of the community living around the ...
Friday, 24 April 09
NAPOCOR TO TENDER FOR 195,000 T COAL - ABS-CBNNEWS.COM
Top Philippine electricity producer National Power Corp. (Napocor) said on Friday it will hold a tender on May 20 to buy 195,000 tons of steam coal ...
Friday, 24 April 09
NTPC TO DELVE INTO CONTRACT MINING - ECONOMICTIMES
NTPC, India’s largest power producer, plans to cash in on its decades-old experience in handling coal mines by spinning off a separate u ...
Wednesday, 22 April 09
PROTECTED FORESTS FACING UNDERGROUND MINING THREAT - THE JAKARTA POST
The government is soon to issue a presidential regulation allowing mining companies to mine underground in protected forest areas, despite a recent ...
Tuesday, 21 April 09
MITRA RAJASA TO ACQUIRE TWO MINING COMPANIES - THE JAKARTA POST
PT Mitra Rajasa Tbk plans to acquire PT Realita Jaya Mandiri and PT Masindo Artha Resources in South Sumatra, which are worth around US$40 million.
...
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- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Videocon Industries ltd - India
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- The University of Queensland
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
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