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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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Thursday, 18 March 10
COAL PILING UP AT EAST COAST PORTS ON RAKE SHORTAGE
Business Line reported that, more than three million tonnes (mt) of imported coal are awaiting evacuation at the east coast ports of Paradip, Visakh ...
Tuesday, 16 March 10
INDONESIA ROUND VOYAGES WERE GETTING BETWEEN HIGH TEENS - BRS
Another strong week for the bulk market and rates in all segments are now back above pre-Chinese New Year levels. Atlantic volumes remain robust, an ...
Tuesday, 16 March 10
MADHUCON GETS MINING LICENSE IN INDONESIA
Business-Standard reported that, PT Madhucon Indonesia, a subsidiary of the Hyderabad-based infrastructure company Madhucon Projects Ltd, has been g ...
Monday, 15 March 10
BOB KAMANDANU ON INDONESIAS PEAK COAL PRODUCTION, ENERGY SECURITY AND EXPORTS TO INDIA
Bob Kamandanu, the chairman of Indonesian Coal Producers Association (APBI), said the country has an estimated 50 to 70 years of coal reserves.
T ...
Monday, 15 March 10
CIL BOARD CLEARS 10 PROPOSALS FOR STRATEGIC PARTNERSHIP OR JVS
Economic Times reported that, Towards achieving a global footprint, state-owned Coal India (CIL) is eyeing strategic partnership or joint ventures w ...
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- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Planning Commission, India
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Indian Energy Exchange, India
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- The University of Queensland
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
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