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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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Sunday, 26 April 09
INDONESIAN GOVT SAYS COAL MINES CAUSE WEEKLONG FLOOD - THE JAKARTA POST
Samarinda administration in East Kalimantan admitted openly Thursday that the weeklong flood that paralyzed the city was caused by unruly management ...
Saturday, 25 April 09
FOREIGN SHARE DIVESTMENT STARTING THE 6TH YEAR OF PRODUCTION - MAJALAH TAMBANG
The government would set a divestment scheme for foreign miners, which would require companies to divest their ownership starting the 6th year of pr ...
Saturday, 25 April 09
INDO TAMBANGRAYA MEGAH ALLOCATED USD 126 MILLION FOR CAPITAL SPENDING - MAJALAH TAMBANG
Somyot Ruchirawat, President Director of PT Indo Tambangraya Megah, Tbk (ITMG), has announced the company's total dividend payment of Rp 1,345 per ...
Saturday, 25 April 09
MINING SECTOR IS STILL ON THE SURPLUS - THE JAKARTA POST
The global financial crisis is apparently also having an impact on the mining sector. People are thinking twice about investing in the mining sector ...
Saturday, 25 April 09
ADARO RUNS CATARACT OPERATION PROGRAM - THE JAKARTA POST
As part of its CSR program, thermal coal producer PT Adaro Indonesia has made cataract operations available to residents of Tandjung district, South ...
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- Agrawal Coal Company - India
- White Energy Company Limited
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- The University of Queensland
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Planning Commission, India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
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