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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, 21 April 09
INDONESIAN GOVT TO ALLOW UNDERGROUND MINING IN PROTECTED FORESTS - THE JAKARTA POST
The government will issue a regulation allowing mining companies to carry out underground mining in protected forests.
"This regulation will ...
Tuesday, 21 April 09
INDONESIAN GOVT LIKELY TO MISS INVESTMENT TARGETS FOR ENERGY, MINING - THE JAKARTA POST
The total value of investments in energy and mining sectors by the end of the year is likely to be below the government’s target, as a result of ...
Monday, 20 April 09
INDONESIAN COAL MINING ASSOCIATION CALLED TO CONTROL MINERS - MAJALA TAMBANG
The Indonesian Coal Mining Association (ICMA) is called to expand its membership further in view of controlling the conduct of miners in the nationa ...
Monday, 20 April 09
BANPU PLANS TO SHIP 2 MLN T COAL TO CHINA IN 09 - REUTERS
Banpu, Thailand's largest coal miner, plans to increase coal shipments to China by about 30 percent to 2 million tonnes in 2009, company officials ...
Monday, 20 April 09
INDO TAMBANGRAYA 2009 OUTPUT TO GO UP 16% - THE JAKARTA POST
Indonesia's third largest coal producer, publicly listed PT Indo Tambangraya Megah (ITM), is targeting to raise production by 16 percent this year ...
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- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- VISA Power Limited - India
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Minerals Council of Australia
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
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