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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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Tuesday, 25 May 10
BUMPER YEAR PREDICTED FOR INDONESIAN COAL - THE JAKARTA GLOBE
The Jakarta globe reported that, In The country’s coal output may reach 320 million tons this year, up from 300 million tons in 2009, as produ ...
Tuesday, 25 May 10
CHINA'S COAL SHIPMENTS VIA ITS MAIN PORTS RISE BY 13.1 PERCENT IN APRIL
According to the data issued by China's Ministry of Industry and Information on May 21, in April total coal shipments via China's main ports reach ...
Monday, 24 May 10
SAMTAN TO SELL KIDECO TO INDIKA ENERGY?
Insider Stories reported that, Parent company of Indonesia's coal mining contractor PT Petrosea Tbk (PTRO), PT Indika Energy Tbk (INDY) aims to boo ...
Monday, 24 May 10
INDIA'S ESSAR SHIPPING BEGIN COMMERCIAL OPERATIONS OF BULK TERMINAL AT HAZIRA
COALspot.com: Essar Shipping Ports & Logistics Ltd. commences commercial operations of Essar Bulk Terminal at Hazira, one of India's largest dr ...
Monday, 24 May 10
INDONESIAN COAL PRICE REFERENCE (HBA) FOR MAY 2010 REACHES US$ 92.07 PER TON FOB VESSEL
COALspot.com: The directorate general of mineral, coal and geothermal of Indonesia has released Indonesian coal price reference (HBA) for Month of M ...
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- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- White Energy Company Limited
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Mercator Lines Limited - India
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