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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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Tuesday, 16 February 10
KPMG PENS 6-POINT STRATEGY FOR COAL INDIA RESTRUCTURING
Coal India Ltd (CIL) has appointed KPMG Advisory Services Pvt Ltd to advise on consolidating its position as the country’s prime energy provid ...
Monday, 15 February 10
MINING LAW TO BE REVISED
Law No. 4 of 2009 on mineral and coal mining will be revised after a working visit of the Bangka Belitung (Babel) Provincial legislative assembly (D ...
Monday, 15 February 10
EURO COAL PRICES SOFTEN AS CHINESE LUNAR NEW YEAR HOLIDAYS START
Prices of prompt cargoes of coal for delivery into Europe weakened last week on a lack of European demand and market nerves over the possible impact ...
Monday, 15 February 10
INDONESIAN COAL SUFFERS SETBACK AS SUMATRA RAIL LINE HELD UP AGAIN
State-owned coal miner PT Tambang Batubara Bukit Asam’s $1.06 billion rail project in Sumatra faces more delays, and the cost of the project i ...
Monday, 15 February 10
MEC INFRA TO COMMISSION INDONESIA RAIL PROJECT
A joint venture between Ras Al Khaimah Investment Authority (Rakia) RAK Investment Authority and Minerals Energy and Commodities Holdings, a f ...
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- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
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- White Energy Company Limited
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- India Bulls Power Limited - India
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- Power Finance Corporation Ltd., India
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- Africa Commodities Group - South Africa
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- Energy Link Ltd, New Zealand
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- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
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- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
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- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
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- Romanian Commodities Exchange
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- Toyota Tsusho Corporation, Japan
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
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- Mjunction Services Limited - India
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
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- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
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- Commonwealth Bank - Australia
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- Jaiprakash Power Ventures ltd
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- AsiaOL BioFuels Corp., Philippines
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- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
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- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
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- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Australian Coal Association
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- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
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- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
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- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
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- Planning Commission, India
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- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
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- Barasentosa Lestari - Indonesia
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- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
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- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
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- Chamber of Mines of South Africa
- The University of Queensland
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- PowerSource Philippines DevCo
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- Energy Development Corp, Philippines
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- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
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- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
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