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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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Wednesday, 20 January 10
NALCO SEEKS CONSULTANT FOR $4 BILLION INDONESIAN SMELTER, PLANT
National Aluminium Co., India’s second-biggest producer of the metal, called for bids for a consultant on its proposed aluminum smelter and co ...
Wednesday, 20 January 10
NTPC PLANS TO SET UP ARM FOR ACQUIRING COAL ASSETS ABROAD
NTPC, the world’s second-largest independent power producer (IPP), plans to set up a new entity for acquiring coal assets abroad to secure fue ...
Wednesday, 20 January 10
CEMENT FIRMS TO BUY POWER PLANT COAL ASH
CEBU, Philippines - Cement companies in Cebu are interested to buy the coal ash that will be produced from the coal-fired power plant in Toledo City ...
Tuesday, 19 January 10
CHINA TO INCREASE THERMAL COAL IMPORTS - WEN
China's Premier Wen Jiabao said on Tuesday that China will appropriately increase imports of thermal coal to ease the country's power shortages.
...
Tuesday, 19 January 10
CESC TO BUY 100,000 MT OF INDONESIAN SUB BITUMINOUS COAL
COALspot.com (India): CESC, India’s one of the largest and oldest private power producer is expected to issue a closed tender any time this we ...
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- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- The University of Queensland
- Eastern Energy - Thailand
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Planning Commission, India
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
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