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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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Saturday, 02 May 09
COAL PRICES TO RISE ON CHINESE SUPPLY, INDIAN DEMAND, UBS SAYS
Peter Hickson, an analyst with UBS AG in London, comments on prices for thermal coal, burned to generate power. He commented in a report today.
& ...
Friday, 01 May 09
DEUTSCHE, BECKKETT CLAIMING ADARO WIN - THE JAKARTA GLOBE
Both Deutsche Bank AG and Beckkett, an investment firm controlled by Indonesian tycoon Sukanto Tanoto, claimed victory on Tuesday after Singapore&rs ...
Thursday, 30 April 09
SAN MIGUEL IN TALKS TO BUY STAKE IN ADARO - REUTERS
San Miguel Corp is in talks to buy a stake worth about $500 million in Adaro Energy , Indonesia's largest coal producer by market value, the Philip ...
Wednesday, 29 April 09
BAYAN READY TO OPERATE WORLD'S LARGEST COAL QUALITY IMPROVEMENT FACILITY - MAJALAH TAMBANG
PT. Bayan Resources Tbk. (hereinafter referred to as Bayan), an Indonesian coal manufacturer, announced that they are ready to operate the world's ...
Wednesday, 29 April 09
NEW GOV'T REGULATION SHOULD INCORPORATE CONFLICT SETTLEMENT BODY - ICMA (MAJALAH TAMBANG)
A draft government regulation on mineral and coal is currently in a process of completion. The Indonesian Coal Mining Association (ICMA) proposed th ...
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- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- VISA Power Limited - India
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
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