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