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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, 13 May 09
INDONESIA ADARO NET PROFIT, REVENUE TO RISE IN 2009 - REUTERS
INDONESIA's largest coal producer by market value, PT Adaro Energy Tbk, expects double-digit growth in revenue and net profit this year, an officia ...
Wednesday, 13 May 09
ALPHA TO BUY RIVAL, CREATING NEW US COAL HEAVYWEIGHT - MININGWEEKLY.COM
Alpha Natural Resources, the biggest supplier of metallurgical coal in the US, has agreed to buy Maryland-based rival Foundation Coal for about $1,4 ...
Tuesday, 12 May 09
CHINA MINERS CUT COAL PRICE OFFER TO JAPAN UTILITIES - ALIBABA.COM
* Producers cut offer to $75.50 a tonne from over $80
* Negotiations may conclude soon as price gap narrows
* New offer at discount of about 43 pe ...
Tuesday, 12 May 09
INDO TAMBANGRAYA SEES 2010 COAL OUTPUT UP 25 PCT - REUTERS
Indonesian coal miner, PT Indo Tambangraya Megah (ITMG.JK), expects coal output to increase by up to 25 percent next year as production kicks in at ...
Tuesday, 12 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 ...
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- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- VISA Power Limited - India
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Australian Coal Association
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- PTC India Limited - India
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
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