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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, 07 January 10
INDONESIAS COAL OUTPUT MAY RISE TO 309 MILLION TONS IN 2014 - BLOOMBERG
Indonesia’s coal production may rise to 309 million tons by 2014 from an estimated 250 million tons this year, Bambang Setiawan, director-gene ...
Wednesday, 06 January 10
RICHARDS BAY SAYS 46% OF COAL EXPORTS WENT TO EUROPE
Richards Bay Coal Terminal, through which almost all of South Africa’s coal exports are routed, said 46 percent of the coal it exported in 200 ...
Wednesday, 06 January 10
CHINA-AUSTRALIA INVESTMENT TIES SEEN IMPROVING IN 2010
Australia and China showed a united front in a bid to improve investment ties as they signed a $3-billion coal deal on Wednesday, following a rocky ...
Wednesday, 06 January 10
INVESTMENT IN MINING TO TOP $2.5B IN 2010
The government plans to invest US$2.5 billion in the mining sector, an official said Tuesday.
Bambang Setiawan, the director general of mineral r ...
Wednesday, 06 January 10
SAS 2009 COAL EXPORTS THROUGH RBCT FLAT AT 61MT
Exports through South Africa’s Richards Bay Coal Terminal (RBCT) remained flat in 2009, as the terminal faced “critical business challen ...
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- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Planning Commission, India
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Economic Council, Georgia
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
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