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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, 29 December 09
PROFIT IN COAL INDUSTRY DOWN 9.4% Y-O-Y IN JAN.- NOV.
In November, China's coal production was 289mln tons, up 26.3% year on year, an increase of 5.2% over last month. China's average daily trucks loa ...
Tuesday, 29 December 09
DHARMA HENWA EYES 20% REVENUE GROWTH
Local integrated mining services provider PT Dharma Henwa, which was earlier this year acquired by coal mining giant PT Bumi Resources, expects reve ...
Monday, 28 December 09
NEED TO IMPORT COAL COMES EARLY
Viet Nam may need to start importing coal as early as 2012, three years earlier than expected, to meet its electricity demands.
The Viet Nam Coal ...
Monday, 28 December 09
GOVT EYES $3.57B MINING, GEOTHERMAL INVESTMENT
The country can expect up to US$3.57 billion in investment in mining and geothermal energy next year, which would represent an increase by more than ...
Monday, 28 December 09
INDONESIAN MINER LINKED TO FUGITIVE FINANCIER
The Energy Ministry is unlikely to approve the transfer of ownership of coal miner PT Riau Baraharum on allegations it is indirectly owned by fugiti ...
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- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Planning Commission, India
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Australian Coal Association
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- The University of Queensland
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- PTC India Limited - India
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
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