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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, 27 April 11
KEWESPO CALLS FOR 765KT OF THERMAL COAL
COALspot.com - South Korea's East-West Power Co's (KEWESPO) has issued a tender to buy total 765,000 tonnes of thermal coal for delivery between J ...
Wednesday, 27 April 11
HARUM ENERGY TO PAY RP 659.1B IN DIVIDENDS - THE JAKARTA POST
The Jakarta Post reported that, Indonesian coal miner Harum Energy is planning to pay out Rp 659.1 billion (US$76.46 million) in dividends this year ...
Wednesday, 27 April 11
TSIS $5 MILLION PLANT TO START PRODUCING UPGRADED COAL - THE JAKARTA POST
The Jakartapost reported that, PT Total Sinergy International (TSI), in association with Agritrade Resources Limited of Hong Kong, will upgrade its ...
Wednesday, 27 April 11
RAIN CONSIDERS COAL MINES TAKEOVER - INSIDER STORIES
Indonesian's tenth largest coal miner in term of coal concession, PT Resource Alam Indonesia Tbk (KKGI), is considering to acquire several coalmine ...
Wednesday, 27 April 11
DRY BULK MARKET LACKS ACTIVITY, RATES KEEP RETREATING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the Easter Holidays for a large of the world now behind, the dry bulk market kept lacking activity on Tuesday, which led the Baltic Dry Index ( ...
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- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Planning Commission, India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
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