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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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Wednesday, 10 August 11
KILLARA RESOURCES TO ACQUIRE SIX COAL CONCESSIONS OF TASON HOLDINGS
COALspot.com - Killara Resources Limited, an Australian listed company has formed PT Tavesco Killara Energy (TKE), a joint company with PT Tavesco I ...
Wednesday, 10 August 11
RESOURCE NATIONALISM IS MAIN BUSINESS RISK FOR MINING SECTORS, E&Y SURVEY
Resource nationalism is top of the business risk list for mining and metals companies around the world, while supply capacity constraint issues cont ...
Wednesday, 10 August 11
INDONESIAN COAL MINING ASSOCIATION OPPOSES LOW-GRADE COAL EXPORT BAN
COALspot.com - The Indonesian Coal Mining Association (ICMA) frowns on and challenges the government plan to ban the low-grade coal export inf ...
Wednesday, 10 August 11
ABM INVESTAMA TO OFFLOAD 20% IPO
Integrated coal mining PT ABM Investama, affiliated company of Tiara Marga Trakindo Group, aims to dispose 20% stake during an initial public offeri ...
Tuesday, 09 August 11
INDONESIAS COAL PRODUCTION GREW BY 19.4% LAST YEAR - BP
COALspot.com - Indonesia’s coal production grew by 19.4% last year to 305.879 million tonnes from 256.181 million tonnes in 2009, the fastest ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
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- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
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- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
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- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
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- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
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- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
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