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