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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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- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- MS Steel International - UAE
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
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