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