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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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Friday, 04 December 09
JSW ENERGY TO BUY OUT PARENT FIRM'S COAL BLOCK
JSW Energy plans to buy the stake held by JSW Steel in a thermal coal block in Mozambique in an attempt to become an integrated energy company with ...
Thursday, 03 December 09
JAPAN 2010 COAL IMPORTS SEEN FLAT, INDIA'S ROBUST - INDUSTRY
* Japan's demand seen steady in 2010 at 110 mln tonnes
* India's demand seen as robust, at 70 mln tonnes
Reuters reported that, Thermal coal i ...
Thursday, 03 December 09
INDONESIA MAY ALLOW COAL SALES BELOW GOVT PRICE
Reuters reported that, Indonesia is considering giving producers some flexibility to sell coal below the government's monthly benchmark price to co ...
Thursday, 03 December 09
INDONESIA SEEKS TO INCREASE COAL SHIPMENTS TO INDIA, CHINA
Bloomberg reproted that, Indonesia, Asia’s biggest coal exporter, seeks to increase shipments to India and China as the economies improve and ...
Thursday, 03 December 09
COAL INDIA IPO LIKELY TO HIT MARKETS BY NOVEMBER 2010
Soon investors will get to own a slice of India's largest coal mining company. Coal India its initial public offering will hit markets in November ...
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- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- MS Steel International - UAE
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