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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, 04 February 11
ADARO ENERGY FY10 COAL SALES UP 6 PERCENT TO 43.84 MILLION
As reported by insider stories, Indonesian coal miners PT Adaro Energy Tbk has produced 42.20 million tons of coal in 2010, a 4 percent increase com ...
Thursday, 03 February 11
MERCATOR LINES TO INVEST RS 200-250 CRORE ON COAL MINE IN INDONESIA - ECONOMIC TIMES
Economic Times reported that, Mercator Lines, the HK Mittal-controlled shipping-to-mines major, will invest about 200-250 crore (US$ 43.825 - 54.781 ...
Thursday, 03 February 11
DRY BULK MARKET LOOKS SET TO BOTTOM OUT NIKOS - ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market having lost more than 72% of its value in the last month or so and having retreated to a 2-year low, it seems that the bott ...
Wednesday, 02 February 11
INDONESIA MAY MISS COAL EXPORT TARGET IN 2011
COALspot.com - Indonesian Trade ministry has instructed independent surveyors temporarily not to issue pre-shipment survey report (LS) to the compan ...
Wednesday, 02 February 11
BAYAN TO SUPPLY COAL TO TP UTILITIES LTD
Insider Stories has reportd that, Indonesia's one of the leading coal miner PT Bayan Resources Tbk (BYAN) owned by businessman Dato' Low Tuck ...
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- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Planning Commission, India
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Australian Coal Association
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- The University of Queensland
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- GMR Energy Limited - India
- Bhatia International Limited - India
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
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