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