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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, 07 August 12
2ND ANNUAL FLOATING TERMINALS
Press Release - After a ground breaking and successful launch in 2011, the 2nd Annual Floating Terminals conferenceis back to address innovation, co ...
Tuesday, 07 August 12
KRISHNAPATNAM PORT HAS DISCHARGED 122,247 MTS OF COAL IN JUST 24 HRS
COALspot.com - Keeping with the tradition of the new records that are set at the Olympic Games 2012, Krishnapatnam Port has also achieved in setting ...
Tuesday, 07 August 12
THE JAKARTA POST EDITORIAL: REVISITING THE MINING LAW
The Jakarta post, one of the leading English news paper in Indonesia writes in its editorial today, what the domestic and foreign investors had drea ...
Tuesday, 07 August 12
BARAMULTI SET TO LIST ON BOURSE IN Q4 - JP
The Jakarta Post reported that, coal miner PT Baramulti Sukses Sarana is preparing to make its shares available to the public in the fourth quarter ...
Tuesday, 07 August 12
REALM RESOURCES COMPLETES STUDY ON ITS KATINGAN RIA COAL PROJECT
COALspot.com - Realm Resources Ltd. has announced that it has completed the Project Study for the Katingan Ria Project in Central Kalimantan, Indone ...
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- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Planning Commission, India
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
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