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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, 02 June 09
GOVT FINALIZING DMO MECHANISM, REFERENCE PRICE FOR COAL - THE JAKARTA POST
Indonesia, the world's largest thermal coal exporter, is finalizing regulations on a reference price on coal, on a domestic market obligation (DMO) ...
Tuesday, 02 June 09
CHINA OVERSEAS COAL DEMAND TO STAY BUOYANT-MINERS (REUTERS)
China's demand for overseas coal is expected to stay strong in the second half as long as prices of imported coal maintain a discount to domestic p ...
Tuesday, 02 June 09
INDONESIA'S COAL EXPORTS REACH US$ 3.44 BILLION SO FAR THIS YEAR - TRADINGCHARTS
Indonesia`s coal exports in the January-April 2009 period increased by 21.31 per cent to US$3.44 billion compared to US$2.83 billion in the same per ...
Tuesday, 02 June 09
INDONESIA'S BUKIT ASAM AGREES HIGHER COAL PRICES - REUTERS
Indonesian state coal miner PT Bukit Asam Tbk said it has agreed coal prices for two power plants owned by state electricity firm PT Perusahaan List ...
Tuesday, 02 June 09
ADARO MAY RAISE COAL SALES TO CHINA, INDIA PLANTS - THE JAKARTA GLOBE
PT Adaro Energy, the country’s second-largest coal producer, may increase sales of power-plant coal to China and India on signs of a global ec ...
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- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- The University of Queensland
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
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