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