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