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