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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, 22 January 10
ENERGY ADVISORY COUNCIL MULLS - COAL EXPORT BAN
The National Energy Council, which advises the House of Representatives and the president on energy issues, has begun to debate a proposal to ban ex ...
Friday, 22 January 10
MERCATOR EYES MORE COAL MINES IN INDONESIA
India’s second-largest private shipping company Mercator Lines is looking at acquiring more coal mines in Indonesia as part of its strategy&nb ...
Friday, 22 January 10
BHAKTI ENERGI IN TALKS OVER COAL VENTURES IN KALIMANTAN
PT Bhakti Energi Persada, one of Indonesia’s biggest miners of brown coal, revealed on Thursday that it was in talks to form a joint venture w ...
Friday, 22 January 10
SHENHUA ENERGY 09 YIELDED 210MN TONS COMMODITY COAL
China Shenhua Energy Co., Ltd. yielded 210 million tons of commodity coal in 2009, hiking 13.2% year on year, the Chinese energy titan announced tod ...
Friday, 22 January 10
JSW ENERGY TO INVEST RS 4,500 CRORE IN COAL MINES ABROAD
The Sajjan Jindal-promoted JSW Energy is planning an investment of Rs 4,500 crore (US$ 978,260,869) to acquire coal mines abroad and another of Rs 1 ...
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- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- The University of Queensland
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
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