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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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Saturday, 12 September 09
$1.5B KALIMANTAN COAL RAIL TENDER EXPECTED BY YEAR-END
The Jakarta Globe reported that, In the second announcement on major coal-railway projects in as many days, Central Kalimantan’s top official ...
Friday, 11 September 09
INDONESIA COAL-PRICES AT $66, SUPPLIERS OFFER AT BARGAIN PRICES
Some Indonesian producers were rushing to sell coal at bargain prices to ease excess stocks and catch shipments before the Muslim Eid Al-Fitr festiv ...
Friday, 11 September 09
ALPHA NATURAL EXPECTS HIGHER MET, STEAM COAL PRICES IN 2010
Mining Weekly reported that, There are encouraging signs that metallurgical coal demand in most key global markets is either returning or poised to ...
Friday, 11 September 09
POWER SECTOR'S DEPENDENCE ON COAL TO CONTINUE
The power sector will continue to be largely dependant on coal-based thermal power plants to meet its energy needs for the next 15-20 years, Power S ...
Friday, 11 September 09
L&T EYES AUSSIE COAL MINE
Commodity Online reported that, Larsen and Toubro is in talks to buy a thermal coal mine in Australia for about $300 million. Thermal coal is used f ...
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- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Australian Coal Association
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Planning Commission, India
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
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