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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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Wednesday, 25 November 09
NAPOCOR SCRAPS AWARD OF 715,000 TONS COAL
Top Philippine electricity producer National Power Corp. (Napocor) said on Wednesday it had cancelled plans to award 715,000 tons in coal supply con ...
Wednesday, 25 November 09
RISING FREIGHT RATES HIT COAL IMPORTERS
While state-owned NTPC’s 12.5 million tonne coal import order may have been aimed at plugging the shortage of coal at its thermal power plants ...
Wednesday, 25 November 09
CSN TO BUY RIVERSDALE STAKE TO BOOST COAL SUPPLIES
Cia. Siderurgica Nacional SA plans to buy 16.3 percent of Australian coal-exploration company Riversdale Mining Ltd. for about A$190.5 million ($175 ...
Tuesday, 24 November 09
ICRA DOWNGRADES TNPL`S RATING TO LAA
Credit rating agency, ICRA has revised the long term rating for the Rs 11.25 billion long-term fund-based bank facilities and Rs 1.5 billion non-con ...
Monday, 23 November 09
INDONESIA MINING RULE THREATENS INVESTMENT DRIVE
A new Indonesian mining rule, limiting contract work that can be outsourced and favouring local players, is shaping up as a new blow to plans ...
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- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Anglo American - United Kingdom
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Planning Commission, India
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Posco Energy - South Korea
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Mjunction Services Limited - India
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