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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, 30 September 09
COKING COAL PRICES MAY TOUCH $200/TN IN 2010-11
Business Standard reported that, Driven by surge in imports of coking coal by China, growth in Japanese steel output and signs of recovery in the In ...
Wednesday, 30 September 09
PURNOMO BIDS 'GOODBYE' TO ENERGY MINISTRY
The Jakarta globe reported that, In what could be construed as a resignation speech from a government official — but perhaps wasn’t &mda ...
Tuesday, 29 September 09
MINING AND ENERGY DAY 2009
The Minister of Energy and Mineral Resources, Purnomo Yusgiantoro led the ceremony marking 2009 Mining and Energy Day celebrations, held at the Depa ...
Tuesday, 29 September 09
BUKIT ASAM REDUCES ITS SALES TARGET
Tempo Interactive reported that, PT Tambang Batubara Bukit Asam Tbk has decided to reduce its sales target this year from 14.5 million tons of coal ...
Monday, 28 September 09
INDONESIA UNLIKELY TO PASS NEW MINING RULES IN 2009
Reuters reported that, Indonesia is unlikely to complete final regulations attached to a new mining and coal law this year, an official said on Mond ...
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- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Planning Commission, India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
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