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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, 20 August 09
INDONESIA'S DELTA DUNIA BUYS COAL FIRM FOR $550 MLN
* Delta Dunia to acquire BUMA for $550 million
* Expect to complete the deal in the fourth quarter of 2009
* Delta Dunia has appointed Barclays Ca ...
Thursday, 20 August 09
MUNDRA PORT BAGS MORMUGAO PORT COAL TERMINAL DEVELOPMENT CONCESSIONS
NDTV reported that, Mundra Port and Special Economic Zone (Mundra Port) the largest private port in India has won the bid for the development of coa ...
Thursday, 20 August 09
INDONESIA'S BUKIT ASAM SET FOR MINE ACQUISITIONS
* Allocates $150 million for coal mine acquisitions
* Expects one deal to be completed by the end of 2009
Reuters world's largest international ...
Thursday, 20 August 09
INDONESIAN COAL EXPORT LESSENS IN FIRST SEMESTER
Domestic coal use has grown by five million tons.
Viva News reported that, Domestic coal export up until the first half of 2009 decreased by four ...
Wednesday, 19 August 09
STEAM COAL PRICES ARE SINKING - THE GERMAN COAL IMPORTERS ASSOCIATION
COALspot.com (German): Oversupply in the World Market. In 2Q 2009 the steam coal prices sank massive in comparison to the previous years quart ...
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- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- The University of Queensland
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Economic Council, Georgia
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- VISA Power Limited - India
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- White Energy Company Limited
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
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