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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, 04 February 10
COAL PRODUCTION EXPECTED TO REACH 280 MILLION METRIC TONS - INDONESIA UPDATE
Indonesia`s coal production target for 2010 has been set at 275 million to 280 million metric tons, according to the Association of Indonesian Coal ...
Thursday, 04 February 10
MASSEY CEO 'NOT EXCITED' ABOUT PROSPECT OF QUARTERLY COAL PRICING
US coal producer Massey Energy is not in favour of switching to a quarterly pricing schedule for metallurgical coal, from the current annual price b ...
Thursday, 04 February 10
BUKIT ASAM GOES SHOPPING FOR MORE COAL MINES
State-owned coal miner PT Tambang Batubara Bukit Asam has set aside Rp 1.5 trillion ($162 million) to acquire two coal mines in East Kalimantan, pre ...
Thursday, 04 February 10
PTT EYES OVERSEAS COAL
Revenue could reachUS$600 million a year
PTT Plc, Thailand's largest energy company, aims to raise the annual revenue from its overseas coal bus ...
Thursday, 04 February 10
RI TO GRADUALLY STOP COAL EXPORTS
Indonesia, which over the past few years has become the world`s third largest coal exporter after Australia and China, is planning to gradually stop ...
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- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- PTC India Limited - India
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
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