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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, 27 February 09
WIKA TO ACQUIRE MINING COMPANY
The Jakarta Post reported that, Public listed state construction firm PT Wijaya Karya (Wika) is to acquire a mining contracting firm in the first se ...
Friday, 27 February 09
COASTAL ENERGEN INKS PACT WITH CHINESE FIRM FOR POWER EQUIPMENT
My Digital Fc reported that, Dubai-based Coal and Oil Group, which is setting up a 1,200MW thermal power plant in Tamil Nadu, has tied-up with China ...
Thursday, 26 February 09
GMR INFRA COMPLETES INDONESIAN BUY
Blonnet reported that, GMR Infrastructure Ltd today confirmed the acquisition of an Indonesian coal mining company for a consideration of $80 millio ...
Wednesday, 25 February 09
INDONESIAN GOVERNMENT TO REGULATE MINIMUM COAL SELLING PRICES
The Jakarta Post reported that, To complement the recent enactment of the new mining law, the government is preparing to introduce a coal pricing in ...
Thursday, 19 February 09
GEOTHERMAL ENERGY DOMINATES 10.000 MW POWER PROJECT - ESDM
The role of coal as a source of energy is superseded by geothermal energy to power the second phase of the 10.000 megawatt (MW) power plant project. ...
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- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- White Energy Company Limited
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Petron Corporation, Philippines
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
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