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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, 21 October 09
INDONESIA'S BUKIT ASAM GETS COAL RAILWAY APPROVAL
Reuters reported that, Indonesian state coal miner PT Tambang Batubara Bukit Asam Tbk said on Wednesday it had been given government approval to sta ...
Wednesday, 21 October 09
COAL DEMAND SOARS AS ASIA ECONOMIES REBOUND - PEABODY
Reuters reported that, Demand for coal to generate electricity and make steel in China and India is expected to grow by 7 percent to 8 percent annua ...
Wednesday, 21 October 09
INDONESIAN SHOCK FOR INDIAN POWER PLANTS
Business-Standard reported that, India’s ambitious plans to generate an additional 180,000 Mw of power in the next seven years will face hurdl ...
Wednesday, 21 October 09
DUTA GRAHA PLANNING TO DELVE INTO MINING SECTOR
The Jakarta Globe reported that, PT Duta Graha, one of the country’s largest private engineering firms, says it intends to diversify into the ...
Tuesday, 20 October 09
RECAPITAL SET TO BUY INDONESIA'S BERAU COAL - SOURCES
* COULD PAY AT LEAST $1.3 BLN FOR BERAU - SOURCES
* RECAPITAL CONFIRMS IT HAS BID FOR BERAU
* BAKRIE GROUP LIKELY TO BACK BID – SOURCES
...
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- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- White Energy Company Limited
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
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