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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 February 10
COAL MINERS FACE SHUTDOWN OVER RECLAMATION FUNDING
Three coal mining companies may be forced to temporarily stop operations this year if they fail to provide funding for a site-reclamation program.
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Thursday, 18 February 10
DECOUPLING FROM OIL PRICES ON STRONG GLOBAL ENERGY DEMAND
A recent coal market conference in Singapore focused on two main issues –— the demand for coal as a source of energy, and coal pricing.& ...
Thursday, 18 February 10
INDONESIA TO INVITE BIDS FOR $1.5 BLN COAL RAILWAY IN MAY
Indonesia plans to invite investors to bid for contracts to build a $1.5 billion coal railway line in Central Kalimantan, a planning ministry offici ...
Thursday, 18 February 10
INDONESIA ZONING RULE THREATENS MINING - INDUSTRY
Reuters reported that, confusion over a new Indonesian land use regulation could halt the operations of some mining firms, providing a new threat to ...
Wednesday, 17 February 10
LAND OVERLAPPING UNAVOIDABLE
Land overlapping issues in the mining industry is unavoidable due to the availability of mineral, coal, and oil resources which are often located be ...
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- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Aditya Birla Group - India
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