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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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Sunday, 05 September 10
HARUM ENERGY EYES 7.4 MILION TONS OF COAL OUTPUT IN 2010
Indonesia's coal miner PT Harum Energy Tbk, controlled by Indonesian tycoon Kiki Barki, is eyeing 7.4 million tons of coal production in 2010, a 27 ...
Sunday, 05 September 10
THE FREIGHT MARKET WAS BIT VOLATILE WITH NO CLEAR INDICATION OF THE MARKET - CAPT REDDY
COALsopot.com: The freight market was bit volatile with no clear indication of the market.
However the BDI continued the upward trend mainly due ...
Sunday, 05 September 10
NOROCHCHOLAI POWER PLANT TO BE COMMISSIONED ON JANUARY 1
Daily news reported that, the Norochcholai coal power plant will be commissioned on January 1, 2011 adding 300 megawatts to the national power grid ...
Friday, 03 September 10
BANPU CUTS INDONESIAN HOLDING BUT ITM REMAINS KEY STRATEGIC UNIT - BANGKOK POST
"SET-listed Banpu Plc, Asean's largest coal miner, yesterday announced the sale of an 8.72% stake in its listed coalmining holding company in ...
Friday, 03 September 10
NALCO, INDONESIAN FIRM DIFFER ON COAL SUPPLY TO SMELTER - DNA INDIA
A few days ago, National Aluminium Company (Nalco) advertised in Indonesian newspapers asking for companies to bid for coal supplies for its 500,000 ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Rio Tinto Coal - Australia
- Australian Coal Association
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
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