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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, 22 October 09
2ND UNITED INDONESIA CABINET UNVEILED
The Jakarta Post reported that, President Susilo Bambang Yudhoyono announced his second United Indonesia Cabinet on Wednesday night, comprising 34 m ...
Thursday, 22 October 09
PEABODY SET TO TAP ASIAN DEMAND FOR COAL
The Australian reported that, US coal giant Peabody Energy plans to double its Queensland and NSW coal exports in the next five years, as it looks t ...
Wednesday, 21 October 09
INDONESIA POWER FIRM SEEKS TO DEFER COAL SUPPLIES
Reuters reported that, Indonesia's state power firm is negotiating with two coal producers, including a unit of PT Bumi Resources Tbk, to defer a c ...
Wednesday, 21 October 09
MINING REGULATION GENERATES CONFUSION IN INDONESIA
The Jakarta Globe reported that, Mining industry representatives said on Friday they were confused by a recently issued regulation restricting the w ...
Wednesday, 21 October 09
LAW ACCOMMODATES NATIONAL AND INVESTOR INTERESTS
COALspot.com (Indonesia): According to ESDM, the government has issued five Lawson the energy and mineral resources sector. These laws will prioriti ...
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- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- The University of Queensland
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
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