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