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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, 19 June 09
COAL FORUM TO MEET IN BALI NEXT WEEK
Bali will host next week a Southeast Asian forum on coal, involving coal producers, consumers and government representatives.
The Indonesian Ener ...
Friday, 19 June 09
KARNATAKA POWER CORP BEGINS BLENDING INDONESIAN COAL
BL reported that the State Government owned power utility Karnataka Power Corporation Limited has begun blending imported Indonesian coal for its th ...
Thursday, 18 June 09
COAL MINING HALTS AFTER DEADLY BLAST - (UPDATE 2)
All mining activists in Sawahlunto, West Sumatra, are at a standstill after a major underground explosion killed at least 31 miners and buried 12 ot ...
Thursday, 18 June 09
INDIA'S HINDALCO CLOSE TO BUYING AUSTRALIA COAL MINE
India's largest aluminium maker Hindalco Industries is close to acquiring a coal mine in Australia, for about $70-$80 million, The Economic Times r ...
Thursday, 18 June 09
GERMAN COAL BUYERS SEE LOWER IMPORTS, PRICES
* Coal imports and prices fall as steel industry slumps
* Coal industry grapples with carbon polluter image
German imports of hard coal are like ...
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- Minerals Council of Australia
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Goldman Sachs - Singapore
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Parliament of New Zealand
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
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