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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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- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Australian Coal Association
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
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