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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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Saturday, 25 April 09
KPC DEVELOPS EAST KALIMANTAN WITH GOVT - THE JAKARTA POST
Kaltim Prima Coal (KPC) focuses on several areas in its CSR projects to help the government increase the welfare of the community living around the ...
Friday, 24 April 09
NAPOCOR TO TENDER FOR 195,000 T COAL - ABS-CBNNEWS.COM
Top Philippine electricity producer National Power Corp. (Napocor) said on Friday it will hold a tender on May 20 to buy 195,000 tons of steam coal ...
Friday, 24 April 09
NTPC TO DELVE INTO CONTRACT MINING - ECONOMICTIMES
NTPC, India’s largest power producer, plans to cash in on its decades-old experience in handling coal mines by spinning off a separate u ...
Wednesday, 22 April 09
PROTECTED FORESTS FACING UNDERGROUND MINING THREAT - THE JAKARTA POST
The government is soon to issue a presidential regulation allowing mining companies to mine underground in protected forest areas, despite a recent ...
Tuesday, 21 April 09
MITRA RAJASA TO ACQUIRE TWO MINING COMPANIES - THE JAKARTA POST
PT Mitra Rajasa Tbk plans to acquire PT Realita Jaya Mandiri and PT Masindo Artha Resources in South Sumatra, which are worth around US$40 million.
...
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- Tamil Nadu electricity Board
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- Planning Commission, India
- Economic Council, Georgia
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- PTC India Limited - India
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
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