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