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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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Tuesday, 28 July 09
BUKIT ASAM ENJOYS STRONG FIRST HALF
The Jakarta Post reported that, state coal miner PT Tambang Batubara Bukit Asam (PTBA) enjoyed a strong first half performance with six-month net pr ...
Tuesday, 28 July 09
NEWCASTLE LOADED 1.943 MILLION TONS OF COAL IN THE WEEK ENDED 27TH JULY 2009
COALspot.com (Singapore) : The volume exported from Australia’s Newcastle port in the week ended - 07:00 hours 27 July 2009 ...
Monday, 27 July 09
INDIA PAYING HIGHEST PRICE FOR S.AFRICA COAL - PRODUCERS
* Spread between South African and Pacific origin coal very wide
* Lack of European buying makes India indicator of value
Reuters reported that, ...
Monday, 27 July 09
TAIWAN'S FORMOSA EYES S.AFRICAN COAL FOR Q4: TRADE
Reuters reported that, Taiwan's Formosa Plastics Group is looking to buy two South African thermal coal cargoes for delivery in the fourth-quarter, ...
Monday, 27 July 09
ADANI POWER'S $625 MILLION IPO TO GENERATE HOT DEMAND
WSJ reported that, Adani Power, the electricity generating unit of India's Adani Enterprises Ltd., is set raise up to US$625 million in wha ...
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- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Economic Council, Georgia
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- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
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- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
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- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- CNBM International Corporation - China
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Karaikal Port Pvt Ltd - India
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