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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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Friday, 28 August 09
JSW MAY BUY AFRICAN MINE FOR US$ 350
The Economic Times Reported that, The Sajjan Jindal-owned JSW Group is in advanced talks to acquire a coal mine in Swaziland, Africa, at an estimate ...
Friday, 28 August 09
COAL INDIA ALLOWED TO IMPORT COKING COAL
The government Thursday allowed the state-owned Coal India to import coking coal and high grade ash thermal coal by acquiring coal properties abroad ...
Thursday, 27 August 09
CIL TO SPEND US$ 1 - 1.5 BN TO ACQUIRE ASSETS IN 4 COUNTRIES
Business Standard reported that, "Coal India is looking to spend $1-1.5 billion in acquiring mining assets in Australia, Indonesia, South Afric ...
Wednesday, 26 August 09
INDIA'S JSW TO DOUBLE JAIGARH PORT CAPACITY TO 20 MT
Sea Trade Asia reported that, JSW Jaigarh Port, a wholly owned subsidiary of JSW Infrastructure & Logistics, plans to double cargo handling capa ...
Wednesday, 26 August 09
JSW ENERGY NEARS COAL-SUPPLY LINKAGE DEAL IN INDONESIA
Sajjan Jindal-owned JSW Energy is close to finalising a coal-supply linkage pact in Indonesia and is also exploring options of acquiring ...
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- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Aditya Birla Group - India
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- The University of Queensland
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
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