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