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