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