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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, 06 April 09
RICHARDS BAY COAL TERMINAL EXPORTS ROSE 5 PERCENT IN MARCH - BLOOMBERG
South Africa’s Richards Bay Coal Terminal, the world’s largest coal-export facility, shipped 5 percent more coal in March than the same ...
Monday, 06 April 09
INDIA'S OSWAL CHEM EYES INDONESIAN COAL MINES -ECONOMICTIMES
Oswal Chemicals and Fertilisers (OCFL), part of Abhay Oswal-led Oswal group, has initiated talks with three separate Indonesian coal firms to ...
Thursday, 02 April 09
FOREIGNERS ALSO CHEER FOR INDONESIA'S THE NEW MINING LAW - MAJALA TAMBANG
Three mining giants, Australia's Rio Tinto along with Canada's Barrick Gold and Southern Arc, are among foreign corporations currently applying fo ...
Wednesday, 01 April 09
INDONESIAN GOVERNMENT REVISES MINING REVENUE TARGET DOWN 26% - THE JAKARTA POST
Government income from mining this year, excluding taxes, is expected to drop by about 26 percent to Rp 11 trillion ($957 million), primarily becaus ...
Wednesday, 01 April 09
INDONESIAN OFFICIAL CLAIMS NEW LEGISLATION IS VINDICATED AS OVERSEAS FIRMS LINE UP FOR MINING LICENSES - THE JAKARTA GLOBE
The Energy and Mineral Resources Ministry is expected to issue six mining licenses under the country’s new mining law over the next two months ...
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- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
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