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