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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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Sunday, 01 November 09
THE COAL MOVEMENT TO INDIA FROM SOUTH AFRICA AND INDONESIA WOULD BE CONTINUE INCREASE - VISTAAR SINGAPORE
COALspot.com (Singapore): The BDI continued to be firm with an increase of 60 points and closed at 3,103 points.
The cape index also was firm an ...
Sunday, 01 November 09
INDONESIA ADARO Q3 NET PROFIT JUMPS ON COAL DEMAND
* Q3 net profit up 131.6 percent to 1.27 trillion rupiah
* Q3 revenue up 56.8 percent to 7.12 trillion rupiah
Reuters reported that, Indonesia' ...
Sunday, 01 November 09
PT INDIKA MAY BUY STAKES IN BHPB INDONESIA OPERATIONS
Dow Jones reported that Indonesian coal producer PT Indika Energy may buy stakes in BHP Billiton Limited's Indonesian coal operations and in local ...
Sunday, 01 November 09
ADAVALE RESOURCES MAKES COAL ACQUISITIONS IN INDONESIA
Adavale Resources Limited has entered into an agreement to acquire the rights to two thermal coal projects Tapan and Jambi in Sumatra Indonesia, hel ...
Saturday, 31 October 09
PRODUCERS BENEFIT FROM COAL'S TIGHT SUPPLY AND STRONG DEMAND
The Jakarta Post reported that, The outlook for Indonesian coal producers appears promising with strong volume growth coming from both the domestic ...
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- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
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