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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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Wednesday, 27 May 09
EUROPEAN COAL PRICES FOR 2010 SETTLEMENT DROP TO 11-DAY LOW - BLOOMBERG
Benchmark European coal derivatives declined to an 11-day low as oil prices slumped.
Coal for delivery to Amsterdam, Rotterdam or Antwerp with se ...
Tuesday, 26 May 09
NEW MINING PERMITS TO BE OBTAINABLE WITHIN TWO WEEKS' TIME - MAJALAHTAMBANG
The Indonesian government is currently formulating a procedure for companies willing to obtain mining permits (IUP in its Indonesian abbreviation). ...
Tuesday, 26 May 09
KADIN CALLS FOR BIGGER RECOGNITION OF MINING SECTOR - MAJALAHTAMBANG
The Indonesian Chamber of Commerce and Industry (KADIN Indonesia) had called other sectors, particularly the forestry and the land administration se ...
Tuesday, 26 May 09
TUTICORIN PORT TO INVEST RS 700CR FOR COAL HANDLING FACILITIES
Business Standard reported that, The Tuticorin Port will develop coal handling facilities for state-run Neyveli Lignite Corporation (NLC) and Coasta ...
Monday, 25 May 09
MMTC TO IMPORT 12.5 MN TN COAL FOR NTPC
India's State-run trading firm MMTC Ltd will import 12.5 million tonnes of coal this fiscal for the country’s largest power producer, NTPC. M ...
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- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- The University of Queensland
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Planning Commission, India
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
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