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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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Friday, 28 May 10
INDIAS NEYVELI LIGNITE EYEING INDONESIA, SOUTH AFRICA COAL MINES
Integrated mining and power producer Neyveli Lignite Corporation Thursday said it is exploring possibilities for buying coal mines in Indonesia and ...
Friday, 28 May 10
ADARO ACQUIRES 25% ICP AT US$ 335 MIO
Indonesia's second largest thermal coal miner PT Adaro Energy Tbk (ADRO) today announces formation of new joint venture for Indonesian Coal Project ...
Thursday, 27 May 10
KPCL IS LOOKING FOR 0.50 MLN TON TO IMPORTED STEAMING COAL FOR RAICHUR THERMAL POWER STATION
COALspot.com: KARNATAKA POWER CORPORATION LIMITED, India invited from reputed parties meeting the pre qualifications stipulated for the import ...
Thursday, 27 May 10
TNPL TO BUY 0.240 MLN TON NON-COKING COAL FOR SECOND HALF OF 2010
COALspot.com: Tamil Nadu Newsprint and Papers Limited (TNPL), would like to procure 0.24 mln MT of imported Non-Coking Coal in 6 Shipments of about ...
Thursday, 27 May 10
DRY BULK RATES REACH 2010 HIGHS, BUT FUTURE REMAINS UNCERTAIN
This week is proving to be a milestone for the dry bulk market, as the Baltic Dry Index has propelled itself at never before seen levels for 2010. Y ...
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- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- VISA Power Limited - India
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Thiess Contractors Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- The University of Queensland
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
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