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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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Thursday, 29 October 09
COAL OF AFRICA SEES VELE OUTPUT BY APRIL 2010
* First coal from Mooiplaats mined and sold
* Talks with Transnet on rail PPP on track
Reuters reported that, Coal of Africa (CoAL) said on Mond ...
Thursday, 29 October 09
UAE FUND EYES INDIA POWER FOR INDONESIAN COAL
Reuters reported that, the UAE's Middle East Coal (MEC) is in talks to buy equity stakes in India's power plants in exchange for long-term coal su ...
Thursday, 29 October 09
CESC POSTS RS 126 CRORE (US$ 26,655,178) NET PROFIT IN QUARTER TWO
Economic Times reported that, Energy major CESC posted a marginal increase in net profit at Rs 126 crore (US$ 26,655,178) for the quarter ended Sep ...
Thursday, 29 October 09
INDIA MMTC TENDER SET TO BOOST S.AFRICA COAL
The South African coal market is set to be boosted further by India's state-owned trading firm MMTC Ltd's tender for 12.5 million tonnes, Indian t ...
Thursday, 29 October 09
INDIA CEMENTS SET TO ACQUIRE COAL MINE IN INDONESIA
Business-Standard reported that, India Cements is set to acquire a coal mine in Indonesia for around $20 million (around Rs 100 crore). The company ...
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- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Australian Coal Association
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
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