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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, 15 May 09
INDIKA EXPECTS TO INCREASE COAL PRODUCTION BY 12.68% IN 2010 - THE JAKARTA POST
ENERGY and infrastructure company PT Indika Energy, the parent company of Indonesia's third largest coal producer PT Kideco Jaya Agung, expects its ...
Thursday, 14 May 09
INDONESIA 2009 COAL OUTPUT REVISED DOWN - REUTERS
* Indonesia coal output seen at 240 million tonnes in 2009
* Coal exports down 11.2 pct to 44.79 mln tonnes in Q1 2009
* Production down 1.4 pct t ...
Thursday, 14 May 09
PAKISTAN WILL IMPORT 3.2 MILLION TON OF COAL IN 2009 - SEATRADE
COALspot.com (Pakistan) - SEATRADE Group of pakistan a single largest imported coal supplier in Pakistan, forecasting Pakistan steam coal imports wi ...
Wednesday, 13 May 09
ADARO, ITM EXPECT COAL GROWTH IN 2009
Adaro, which has a market capitalization of $3.64 billion, sells to 48 customers in 18 countries worldwide, including power utilities Thai Power and ...
Wednesday, 13 May 09
COAL SUPPLY MAY BE VASTLY OVERESTIMATED - ABC SCIENCE
The world's coal supply suggests reserves may be vastly overestimated and we could be facing an unprecedented global energy crisis, according to a ...
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- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Planning Commission, India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- The University of Queensland
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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