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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, 28 October 09
INVESTMENT IN MINING SECTOR HAMPERED BY LATE REGULATIONS
The Jakarta Post reported that, Indonesia may have to wait for a potential massive inflow of new investment into the mining sector due to delays in ...
Tuesday, 27 October 09
CHINA'S SEPT. COAL IMPORTS RISE AS ECONOMY RECOVERS
Bloomberg reported that, China, the world’s largest coal user and producer, increased imports of the fuel in September to meet rising domest ...
Monday, 26 October 09
DARWIN EYES PRIVATE INVESTMENT
The Jakarta Post reported that, the new energy and ministerial resources minister, Darwin Zahedy Saleh, has set his sights on accelerating the reali ...
Sunday, 25 October 09
THE FUTURE FREIGHT MARKET IS EXPECTED TO HAVE POSITIVE DIRECTION - VISTAAR
COALspot.com (Singapore): According to Vistaar Shipping an experienced ship operator in Singapore, the BDI shot up this week (19-24 October) by abou ...
Saturday, 24 October 09
NTPC SEEKS ALTERNATE COAL SUPPLY FOR KAHALGAON
State-run NTPC is looking at alternate sources of coal to fire its Kahalgaon (Bihar) and Farakka (West Bengal) and power stations, which are facing ...
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- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- The University of Queensland
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Planning Commission, India
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Economic Council, Georgia
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