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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, 30 June 09
ARCELORMITTAL, RIO, 8 OTHERS VIE FOR COAL INDIA MINES
Coal India Ltd. short-listed ArcelorMittal, Rio Tinto Group and eight other companies to develop its abandoned mines to help ease a shortage of coal ...
Monday, 29 June 09
INDONESIA PLANS 20 PCT FOREIGN MINING SALE LAW
Indonesia plans to require foreign investors in mining firms to gradually divest shares starting from the fifth year of commercial production, but m ...
Monday, 29 June 09
CHINA ENJOYS STABLE COAL ECONOMY IN THE FIRST FIVE MONTHS OF 2009
In the first five months of the year, China's raw coal production had continued to rise, and coal market stayed in a balance in terms of supply-dem ...
Monday, 29 June 09
GOVERNMENT FINE TUNES MINING LAW
The government is planning to require all foreign-owned mining companies to divest 20 percent of their businesses to local entities after five years ...
Sunday, 28 June 09
INDIA CEMENTS TO INVEST RS 1,500 CR OVER 2 YEARS
Chennai-based India Cements is planning to invest around Rs 1,500 crore over the next two years for setting up a greenfield project in Rajasthan, po ...
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- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
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