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