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