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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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Wednesday, 11 November 09
INDONESIA ASKS DOMESTIC COAL FIRMS TO SET ASIDE 30PCT OF OUTPUT
Indonesian government said that it had asked domestic coal producers to set aside 30% of their output next year to meet demand from new coal fired p ...
Wednesday, 11 November 09
MINING ACQUISITIONS BECOMING MORE STRATEGIC - E&Y
Mining Weekly reported that, Although miners around the world are looking to position themselves for growth, companies are being more selective when ...
Tuesday, 10 November 09
THAI COAL MINER BANPU Q3 NET UP, BEATS FORECAST
Reuters reported that, Thailand's top coal miner, Banpu, said on Tuesday its third-quarter net earnings rose a higher-than-expected 22 percent, hel ...
Monday, 09 November 09
NAPOCOR DEFERS 50,000 T COAL TENDER
Top Philippine electricity producer National Power Corp. (Napocor) has indefinitely postponed a tender for supply of 50,000 tons of steam coal sched ...
Monday, 09 November 09
SAM'S SEAFOOD HOLDINGS SET TO COMMENCE DRILLING AT INDONESIAN COAL PROJECT
Proactive Investors reported that, Sam's Seafood Holdings is preparing to kick off diamond drilling at the company's Indonesian coal project after ...
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- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- White Energy Company Limited
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Medco Energi Mining Internasional
- PTC India Limited - India
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
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