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