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