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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, 08 October 09
MINING TO ATTRACT $6B: BKPM
The Jakarta Post reported that, Indonesia’s mining sector could expect investment of up to US$6 billion in the 2010-2012 period, in part becau ...
Thursday, 08 October 09
INDIA DEMAND TO HELP DIRE COAL OUTLOOK - MACQUARIE
Reuters reported that, Macquarie Securities said on Wednesday its bearish short-term outlook on thermal coal may begin improving in a year's time o ...
Thursday, 08 October 09
ESSAR UNIT WINS INR 479 CR (US$ 103,272,401) ORISSA PROJECT
The firm will develop and operate the terminal at Paradip port; the contract will stretch up to 30 years
Live Mint reported that, Essar Shipping ...
Wednesday, 07 October 09
ESSAR, JINDAL IN TAKEOVER TUSSLE FOR AUSTRALIAN COAL MINER
Reuters reported that, Privately owned Essar Group has launched a surprise A$144.2 million ($128.1 million) bid for Australian coal minnow Rocklands ...
Wednesday, 07 October 09
ADARO SECURES $500 M LOAN
The Jakarta Post reported that, The country's second largest coal producer, PT Adaro Energy announced on Wednesday that it has secured US$500 milli ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- The University of Queensland
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
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