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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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Wednesday, 26 May 10
ADANI GROUP EYES AFRICA FOR COAL MINING PROJECTS
India Info Line reported that, After acquiring coal mines for importing Indonesian coal to run its thermal power plants in the country, the Adani Gr ...
Wednesday, 26 May 10
DRY BULK MARKET SHOOTS UP, CLOSES IN ON POST-CRISIS ERA HIGHS
In an opposite trend than that of the previous week, the Baltic Dry Index (BDI), a benchmark for tracking costs to haul commodities at sea, shot up ...
Wednesday, 26 May 10
BUMI TO CUT UP TO USD 1 BILLION DEBT IN 12 MONTHS
Press Release : PT Bumi Resources Tbk. announced yesterday that it has revived its intent to issue non preemptive shares and added this to the agend ...
Tuesday, 25 May 10
COAL PRODUCTION MAY REACH 320 MILLION TONS THIS YEAR - THE JAKARTA POST
The Jakarta Post reported that, Indonesian coal miners expect to produce as much as 320 million tons of coal this year, an increase of nearly 7 perc ...
Tuesday, 25 May 10
KALIMANTAN COAL RAIL PROJECT RUNS INTO COST DELAY - THE JAKARTA GLOBE
The Jakart globe reported that, A$1.5 billion coal rail and port project planned for Central Kalimantan may be delayed by a year after a review of t ...
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- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Australian Coal Association
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Planning Commission, India
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
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