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