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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, 07 July 09
Q+A - INDONESIA MINING SECTOR FACES ELECTION RISKS - REUTERS
Indonesia has struggled to lure foreign investment to its mining sector in recent years, and the nationalist line on resource exploitation taken by ...
Tuesday, 07 July 09
INDIKA ENERGY COMPLETES THE ACQUISITION OF PETROSEA
TAMBANG reported that, PT Indika Energy, Tbk has officially announced that it has completed the acquisition of PT Petrosea, Tbk. from Clough Interna ...
Tuesday, 07 July 09
RUSSIAN AUDITORS ATTACK COAL EXPORTERS OVER PRICING
Russia's budget is losing substantial revenues because the country's exporters ship coal overseas at artificially low prices through various offsh ...
Tuesday, 07 July 09
RBCT COAL EXPORTS TO REMAIN BELOW CAPACITY IN 2009
Coal volumes railed to South Africa’s Richards Bay Coal Terminal are continuing to fall far short of the corridor’s nameplate yearly cap ...
Tuesday, 07 July 09
TATA POWER AID THE INDONESIAN COAL MINES
BL reported that Mr Prasad Menon MD of TATA Power aid the Indonesian coal mines PT Kaltim Prima Coal and PT Arutmin Indonesia in which TATA Power ha ...
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- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- MS Steel International - UAE
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- GMR Energy Limited - India
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Planning Commission, India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
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