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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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Monday, 20 April 09
PT PAMAPERSADA SEES ITS REVENUE TO CLIMB BY 20% IN 2009 - STEELGURU
PT Pamapersada Nusantara, a unit of Indonesia's PT United Tractors, said that its 2009 profit will be similar to last year, even as it forecasts re ...
Monday, 20 April 09
NIPPON STEEL SEMI-SOFT COAL PRICE SAID TO DROP 67% - BLOOMBERG
Nippon Steel Corp., Japan’s largest mill, will pay up to 67 percent less for semi-soft coking coal this fiscal year, two industry executives w ...
Monday, 20 April 09
INTERNATIONAL INVESTORS SEEK TO SELL ADARO STAKES - MONEY.CNN
Some international investors in PT Adaro Energy ( ADRO.JK) have approached other companies to sell around a combined 17% stake in the coal miner via ...
Friday, 17 April 09
BHATIA COAL INDIA, VITOL IN DISPUTE - COAL JUNCTION
Bhatia Coal India, a subsidiary of the Bhatia International Group, terminated a coal supply contract with traders Vitol and has initiated arbitratio ...
Friday, 17 April 09
JSW TO BUY THERMAL COAL MINE IN AFRICA
Sajjan Jindal-led JSW Energy is close to acquiring a sub-Saharan African thermal coal mine, which has reserves of more than 200 million tons, to min ...
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- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- India Bulls Power Limited - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
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