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