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