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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, 14 October 09
SA'S COAL OUTPUT LIKELY TO RISE BY 2011, BOOSTED BY WATERBERG MINES
Mining weekly reported that, South Africa's coal production will struggle to meet demand over the next few years, but coal production could likely ...
Tuesday, 13 October 09
INDONESIA'S BAYAN SEES 2010 COAL OUTPUT UP 42 PCT
Reuters reported that, Indonesian coal miner PT Bayan Resources Tbk (BYAN.JK) said on Tuesday it expects its coal output to increase by 42 percent i ...
Tuesday, 13 October 09
STRAITS ASIA UPBEAT ON MEETING 2009 COAL OUTPUT
Reuters reported that, Singapore-listed coal miner Straits Asia is still optimistic about meeting its coal output target of 9 million tonnes this ye ...
Tuesday, 13 October 09
THERMAL COAL DEMAND IN CHINA DRIVES PRICE INCREASES
Metal Miner reported that, Thermal coal prices have been falling this year; contrary to many other commodities, both metals and energy that hit bott ...
Tuesday, 13 October 09
JSW ENERGY SCOUTING FOR PARTNERS, ACQUISITIONS
Business-Standard reported that, JSW Energy is planning to become an integrated power company by bringing in a partner for its transmission business ...
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- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Economic Council, Georgia
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Aditya Birla Group - India
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