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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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Monday, 27 April 09
JSW ENERGY SET TO SNAP UP AFRICAN COAL MINE FOR $70 MN - ECONOMIC TIMES
Sajjan Jindal-led JSW Energy is close to acquiring a sub-Saharan African thermal coal mine, which has reserves of more than 200 million ...
Monday, 27 April 09
INDONESIA MINING RULES MAY DETER INVESTORS-OFFICIALS - REUTERS
Indonesia's rules on foreign divestment of mining projects must be revised to address issues such as finding buyers if Southeast Asia's biggest ec ...
Monday, 27 April 09
UNDERGROUND MINING IN FOREST AREAS NOT SO SIMPLE - THE JAKARTA POST
The government's plan to issue a presidential decree allowing mining companies to mine underground in protected forest concession areas has resulte ...
Monday, 27 April 09
COAL PRICES ABOVE FUNDAMENTALS - STUFF.CO.NZ
Coal prices have defied the gravity of fundamental factors, supported by stockpiling prompted by cheaper prompt prices rather than a reflextion of a ...
Sunday, 26 April 09
MITRA HOPES TO SECURE DEALS WITH TWO COAL FIRMS BY JUNE - THE JAKARTA POST
An integrated oil and gas services company, publicly listed PT Mitra Rajasa, is expecting to seal acquisition deals with two coal companies in June, ...
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- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- PTC India Limited - India
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- VISA Power Limited - India
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
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