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