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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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Saturday, 02 January 10
INDONESIAS COAL OUTPUT RISES BY 5%
Indonesia, Asia’s largest coal exporter, produced 254 million tons of coal in 2009, a 5.8 percent increase from 2008 and well ahead of the gov ...
Saturday, 02 January 10
TAIPOWER FORECASTS COAL DEMAND TO SNAP DECLINE
Taiwan Power Co., Asia's biggest importer of thermal coal, expects its demand for the fuel to rise in 2010 after falling for two years as the islan ...
Friday, 01 January 10
COAL INDIA TO START IMPORTING DIRECTLY
According to sources, the coal major has already finalised tender document to import four million tonnes thermal grade coal for supplies to NTPC. Th ...
Thursday, 31 December 09
INDONESIA SEES 2010 MINING INVESTMENT UP 39 PCT
Reuters reported that, Indonesian mining investment is expected to hit $2.5 billion next year, up from $1.81 billion in 2009, supported by greater c ...
Thursday, 31 December 09
YANDICOOGINA BECOMES FIRST MINE IN AUSTRALIA TO PRODUCE 50 MILLION TONNES A YEAR
COALspot.com Press Release: Rio Tinto's Yandicoogina, Australia's largest-producing iron ore mine, has broken the 50 million tonne mark for annual ...
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- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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