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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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Thursday, 10 June 10
R-POWER, INDONESIA'S SUGICO INK PACT TO ACQUIRE COAL MINES - ECONOMIC TIMES
Economic Times of India reported that, Anil Ambani-owned Reliance Power has signed a share-sale agreement with Indonesia’s Sugico Group to acq ...
Thursday, 10 June 10
PARAMOUNT MINING CORPORATION REPORTS KEY INDONESIAN JV AGREEMENT
Indonesia focussed Paramount Mining Corporation has reported that its Indonesian subsidiary, PT Paramindo, has concluded a Joint Venture Agreem ...
Wednesday, 09 June 10
INDIA, CHINA TO PROP UP THERMAL COAL DEMAND - COMMODITY ONLINE
Commodity Online : Weakness in thermal coal demand in OECD will continue to be offset by growth in demand in India and China. Therefore, the s ...
Tuesday, 08 June 10
TATA POWER LOOKING TO PICK UP STAKE IN OVERSEAS COAL MINES - ECONOMIC TIMES
Economic Times reported that, Tata Power is looking for a strategic stake purchase in coal mines of Indonesia or South Africa to fuel its upcoming 1 ...
Tuesday, 08 June 10
RUSSIA REPORTED A TENFOLD GROWTH IN COAL EXPORTS TO CHINA IN 1Q 2010 - BRS
A retreat for all the dry bulk segments this week, but especially for the Panamax and Supramax markets. The Panamax 4TC remains over US$30,000/day h ...
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- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Planning Commission, India
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Marubeni Corporation - India
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
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