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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, 26 March 10
CHINA PLANS TO INCREASES IMPORT COAL GREATLY IN 2010
– Asia Pacific Coal Trading & Investment Outlook 2010-
COALspot.com (Press Release): China plans to increase coal import significantly ...
Friday, 26 March 10
NTPC IN TALKS FOR INDONESIAN MINE - LIVE MINT
The deal for the coal mine with 1.8 bn tonnes of reserves may be valued at $1 bn
Live Mint reported that, State-run power utility NTPC Ltd is in ta ...
Friday, 26 March 10
ESSAR GROUP SIGNS DEAL FOR INDONESIAN COAL MINE - BUSINESS LINE
Looking ahead
The coal from the Indonesian mine would provide raw material to the group's power projects
The Aries coal mines acquired by the gro ...
Thursday, 25 March 10
CHINA RAILWAY WINS $4.8 BILLION INDONESIA PROJECT - BLOOMBERG
Bloomberg reported that, China Railway Group Ltd. won a $4.8 billion order from PT Bukit Asam, Indonesia’s state-owned coal producer, for a co ...
Thursday, 25 March 10
INDIAS MAHARASHTRA SEEKS TO IMPORT 3.35 MILLION TONS OF COAL - BLOOMBERG
Bloomberg reported that, Maharashtra State Power Generation Co., a provider of electricity to India’s commercial hub Mumbai, is seeking 3.35 m ...
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- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- MS Steel International - UAE
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
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