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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
NO AMDAL, NO COAL MINING IN KALIMANTAN: MINISTRY
To prevent further environmental damage, the government has said it would revoke the licenses of mining firms operating in Kalimantan that do not ha ...
Thursday, 04 February 10
ANTICIPATING DOMESTIC COAL DEMAND
Indonesia has an abundant amount of coal reserves, which in 2008 is estimated at 7,12 billion tones. Coal production in 2008 reached 231,18 mi ...
Wednesday, 03 February 10
CHINA'S MAIN COAL PRICES FALL AS WINTER DEMAND EASES
Weekly coal prices at China's Qinhuangdao port, a benchmark in the world's biggest producer and consumer of the fuel, fell for the first time in s ...
Wednesday, 03 February 10
NEWCASTLE COAL EXPORTS RISE 3%; SHIP QUEUE SHORTENS
Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, increased 3 percent last week while the ...
Wednesday, 03 February 10
INDONESIA BUKIT ASAM SEES DOUBLE DIGIT 2010 REV GROWTH
* 2009 net profit rose an estimated 50 pct
* Sees opportunities for overseas acquisitions
Indonesian state-owned coal miner Bukit Asam saw 2009 ...
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- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Planning Commission, India
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
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