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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, 01 April 09
COAL FIRMS' PROFITS NOT EXPECTED TO GROW IN '09 - - THE JAKARTA POST (ANALYSTS)
Despite their windfall profits in 2008, analysts doubt that PT Bumi Resources Tbk or any other coal firms will post profit growth this year, with pr ...
Tuesday, 31 March 09
DEUTSCHE BANK TO ADD COAL, GAS, SHIPPING IN COMMODITY EXPANSION - BLOOMBERG
Deutsche Bank AG, after quadrupling revenue from commodities in two years, plans to add coal, European natural-gas and shipping to its business, ant ...
Monday, 30 March 09
CHINA SHENHUA SAYS AGREES DOMESTIC COAL DEALS - REUTERS
Chinese coal mining giant China Shenhua Energy Co has agreed long-term contracts with some Chinese power producers, its President Ling Wen said on M ...
Sunday, 29 March 09
SHENHUA ENERGY 2008 NET RISES 29% TO RECORD ON PRICES - BLOOMBERG
China Shenhua Energy Co Ltd., the nation’s biggest coal producer, said profit rose 29 percent to a record in 2008 after it increased productio ...
Friday, 27 March 09
SOUTH AFRICAN COAL EXPORTS EXPECTED TO RISE IN 2009, BUT RAIL WILL DETERMINE BY HOW MUCH - MININGWEEKLY
South Africa has an expanding coal-export terminal, but an uncertain rail capacity.
The mismatch is something South Africa cannot afford, given i ...
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- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- White Energy Company Limited
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- The University of Queensland
- GMR Energy Limited - India
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- PTC India Limited - India
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
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