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