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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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Saturday, 12 December 09
INDONESIA'S COAL RUSH - SOOTY SUCCESS
Rising demand from China and India is stoking Indonesia’s exports of coal
FOR power stations on the coast of China, it is often cheaper to ...
Thursday, 10 December 09
ENVIROCOAL REGISTERED IN 33 COUNTRIES
PT Adaro concerned to register the brand overseas
PT Adaro Energy Tbk has registered the Envirocoal trademark for its coal products in 33 countri ...
Thursday, 10 December 09
INDIA TO IMPORT 28 MILLION TONNE OF STEAM COAL
Faced with short supply of coal from domestic sources, the Indian power ministry has revised upwards its coal import target for the current fiscal t ...
Thursday, 10 December 09
INDONESIA'S NEW MINING LAW WILL NOT LIMIT COAL EXPORTS, SAYS GOVERNMENT
The government will allow coal producers to continue exporting even if they miss domestic sales requirements, a senior mining official said, marking ...
Wednesday, 09 December 09
INDONESIA'S RECAPITAL TO PAY $1.48 BLN FOR BERAU
Recapital Advisors, an Indonesian investment firm, will pay $1.48 billion in cash and notes to buy coal miner PT Berau Coal, $300 million of which i ...
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- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- The University of Queensland
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
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