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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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Friday, 29 May 09
INDONESIA PLANS "CLEARING HOUSE" FOR COAL - ALIBABA
Alibaba reported that, Indonesia, the world's biggest thermal coal exporter, plans to set up an agency similar to a clearing house to trade stocks ...
Friday, 29 May 09
INDIKA EYES MORE ACQUISITIONS - THE JAKARTA POST
Having nearly completed the acquisition of engineering and mining company PT Petrosea, energy company PT Indika Energy is preparing for more acquisi ...
Friday, 29 May 09
PTBA PAYS DIVIDENDS OF RP 371.5 A SHARE - THE JAKARTA POST
The annual shareholders' meeting of state-controlled coal producer PT Tambang Batubara Bukit Asam (PTBA) approved on Thursday the allocation of 50 ...
Thursday, 28 May 09
INDIANS CHOOSE SOUTH AFRICA COAL OVER INDONESIAN - MINEWEB (REUTERS)
South African cargoes are about $4 a tonne cheaper than Indonesian coal, as a result India now prefers South Africa .
Indian imports of South Afr ...
Wednesday, 27 May 09
NEWCASTLE PORT'S WEEKLY COAL EXPORTS INCREASE 3.6% - BLOOMBERG
Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, rose 3.6 percent last week while the num ...
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- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
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