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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, 12 August 09
COAL INDIA TO IMPORT 4 MLN T 2009/10 - MEDIA
State-run Coal India Ltd plans to directly import 4 million tonnes of coal in the current fiscal year to March 2010, Chairman Partha Bhattacharyya s ...
Wednesday, 12 August 09
CHINA'S LARGEST COAL PRODUCER TO SET UP COAL RESERVES
China's National Development and Reform Commission has commissioned China Shenhua Energy Co., the nation's largest coal producer, to build 10 stor ...
Wednesday, 12 August 09
NALCO SMELTER CONSTRUCTION MAY FACE DELAY
The Jakarta Post reported that, India’s state-run National Aluminum Company (Nalco) may postpone the construction of an aluminum smelter in In ...
Wednesday, 12 August 09
COAL MINE PLAN SHOT DOWN OVER GREEN CONCERNS
The Times of India reported that, In a major setback to Adani Powers, the principal chief conservator of forests (PCCF) has rejected its proposal fo ...
Tuesday, 11 August 09
INDONESIA'S COAL EXPORTS TO INDIA WILL BE EXEMPTED FROM DUTIES STARTING JANUARY 1, 2013 - BERITA SORE
Berita sore reported that, ASEAN is scheduled to sign a long-awaited Free Trade Agreement (FTA) with India in Bangkok on Thursday aimed at boosting ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Eastern Coal Council - USA
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
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