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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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Sunday, 08 March 09
AUSTRALIA'S FELIX STUDYING COAL ACQUISITIONS IN INDIA, INDONESIA
Bloomberg reported that, Felix Resources Ltd., an Australian supplier of coal to Korea and Japan, is studying acquisitions of energy coal assets in ...
Saturday, 07 March 09
THERMAL COAL PRICES MAY DROP, STANDARD CHARTERED SAYS
Bloomberg reported that, Coal prices may decline as a slump in demand for the fuel outpaces cuts in production, Standard Chartered Plc said.
Exp ...
Friday, 06 March 09
STRAITS ASIA EYES 3RD MINE
Straitstimes reported that, Mining company Straits Asia Resources is on an expansion trail to more than double its output by 2012.
Amid the econo ...
Friday, 06 March 09
INDONESIA MAY MISS 2009 COAL OUTPUT TARGET-OFFICIAL
Indonesia, the world's top thermal coal exporter, may fail to achieve its coal production target this year as the global economic crisis dents dema ...
Friday, 06 March 09
POWER FIRMS HEAD TO INDONESIA FOR COAL
The Hindu Businessline reported that, The enactment of a new, more liberal, mining legislation in Indonesia is drawing coal-starved Indian power uti ...
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- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- PTC India Limited - India
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Australian Coal Association
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
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