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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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Sunday, 08 March 09
AUSTRALIA'S FELIX STUDYING COAL ACQUISITIONS IN INDIA, INDONESIA
Bloomberg reported that, Felix Resources Ltd., an Australian supplier of coal to Korea and Japan, is studying acquisitions of energy coal assets in ...
Saturday, 07 March 09
THERMAL COAL PRICES MAY DROP, STANDARD CHARTERED SAYS
Bloomberg reported that, Coal prices may decline as a slump in demand for the fuel outpaces cuts in production, Standard Chartered Plc said.
Exp ...
Friday, 06 March 09
STRAITS ASIA EYES 3RD MINE
Straitstimes reported that, Mining company Straits Asia Resources is on an expansion trail to more than double its output by 2012.
Amid the econo ...
Friday, 06 March 09
INDONESIA MAY MISS 2009 COAL OUTPUT TARGET-OFFICIAL
Indonesia, the world's top thermal coal exporter, may fail to achieve its coal production target this year as the global economic crisis dents dema ...
Friday, 06 March 09
POWER FIRMS HEAD TO INDONESIA FOR COAL
The Hindu Businessline reported that, The enactment of a new, more liberal, mining legislation in Indonesia is drawing coal-starved Indian power uti ...
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- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Ministry of Mines - Canada
- MS Steel International - UAE
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
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