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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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Tuesday, 25 August 09
INDIAN FIRM TO INVEST $44 MN IN INDONESIA
Economic Times - India Times reported that, BEML Limited, India-based second largest heavy equipment producer in Asia, will invest $44 million in In ...
Tuesday, 25 August 09
BHARAT LOOKS TO BULLDOZE RIVALS WITH LOWER PRICES
The Jakarta Globe reported that, The country’s two established heavy equipment suppliers now have a competitor in the form of Indian firm Bhar ...
Tuesday, 25 August 09
PIKE RIVER DELAYS COAL EXPORTS FROM NEW ZEALAND MINE
South African mining Weekly reported that, The first 60,000-t export shipment from ASX-listed Pike River Coal’s new mine has been delayed unti ...
Monday, 24 August 09
INDONESIAN GOVT ASKED TO CONTROL COAL TRADERS, BROKERS
The Jakarta Post, the leading English news paper in Indoneisa reported that, Businesses are urging the government to bring all coal traders and brok ...
Monday, 24 August 09
10,000 MW TO BE GENERATED THROUGH THAR COAL RESERVES BY 2020
Four projects of 2450 MW approved; govt to invest Rs80bn in five years on infrastructure
The News Pakistan reported that, The Thar Coal a ...
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- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- The University of Queensland
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- PTC India Limited - India
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