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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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Saturday, 25 July 09
HUANENG EYES MAJORITY STAKE IN PT BERAU COAL
CCTV reported that, China's largest publicly traded power company has submitted a bid for controlling stake in Indonesia's fifth largest coal mine ...
Saturday, 25 July 09
ADANI POWER TO IMPORT COAL FOR MUNDRA PLANT
BL reported that more than 50% of the coal requirement for Adani Power’s 4,620 MW Mundra plant will have to be imported from Indonesia though ...
Friday, 24 July 09
INDONESIAN COAL NEWS - UPDATE
Income from tax slow
Since the economic crisis in October 2008 until now, tax from the general mining sector is slow. According to the Director Gene ...
Friday, 24 July 09
S.AFRICA JAN-JUNE EXPORTS TO ASIA AROUND 1.4 MLN T
* China takes 140-150,000 tonnes
* S.Korea imports zero
* Hong Kong utilites buy S.African coal
South African coal exports to Asia excluding India a ...
Friday, 24 July 09
BIG ADARO SHAREHOLDERS CREATE HOLDING COMPANY
The nation’s second-largest coal producer, PT Adaro Energy, said on Thursday that five key shareholders had merged their holdings in the compan ...
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- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- Australian Coal Association
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- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
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- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
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- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
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- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
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- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Parliament of New Zealand
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Planning Commission, India
- Petron Corporation, Philippines
- White Energy Company Limited
- Antam Resourcindo - Indonesia
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- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
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