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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, 19 November 09
FAST-TRACK FOCUS ON COAL POWER MAY COST INDONESIA BILLIONS
The Jakartaglobe reported that, As it begins to tap its massive coal reserves to generate cheap electricity, Indonesia may face additional costs of ...
Wednesday, 18 November 09
THAI PTT PLANS COAL MINE INVESTMENT IN INDONESIA
* To conclude Indonesian coal mine buy in 6 months
* Sees coal output jumping to 20 mln tonnes in five years
Reuters reported that, PTT , ...
Wednesday, 18 November 09
ASIA-PACIFIC MINISTERIAL CONFERENCE ON PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT
“Building Asia’s Infrastructure”
COALspot.com (Indonesia) Press Release: Infrastructure Asia 2010 is Asia’s premier infra ...
Wednesday, 18 November 09
AMBUJA COAL TENDER PRICES EQUATE TO $61.50/T FOB
Reuters reported that, coal prices achieved by Indian cement maker Gujarat Ambuja in its early November tender equate to $61.50 a tonne FOB Richards ...
Tuesday, 17 November 09
JSW STEEL MAY SPEND $500 MILLION TO ACQUIRE COAL MINES OVERSEAS
JSW Steel Ltd., India’s third- biggest producer, may spend $500 million buying coal mines overseas, securing supplies for its local expansion. ...
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- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Central Electricity Authority - India
- PTC India Limited - India
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- London Commodity Brokers - England
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Australian Coal Association
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- ICICI Bank Limited - India
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