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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, 25 March 09
MINISTER ASKS ROYALTIES BE PAID IN COAL, NOT CURRENCY - THE JAKARTA POST
Coal companies could pay their royalties to the government in coal, rather than in rupiah, under a proposal made by Energy and Mineral Resources Min ...
Wednesday, 25 March 09
INDONESIA'S STATE ELECTRICITY COMPANY DEMAND FOR COAL TO SOAR NEXT YEAR AS POWER OUTPUT RISES - THE JAKARTA POST
State electricity company PT PLN will need more coal next year as it seeks to generate more power through new plants operated by its subsidiary PT I ...
Tuesday, 24 March 09
INDONESIA'S KPC AGREES FIRST MAJOR CHINA COAL DEAL - REUTERS
Indonesian miner PT Kaltim Prima Coal last week agreed its first major long-term deal to sell thermal coal to China, with 1 million tonnes to be shi ...
Tuesday, 24 March 09
INDONESIA ANTAM'S SETS ASIDE $37 MLN FOR COAL MINES - REUTERS
Indonesian state-owned miner, PT Aneka Tambang Tbk, has allocated $37 million for acquiring coal mines, the company said on Monday.
Antam said la ...
Monday, 23 March 09
NIPPON STEEL, BMA AGREE TO 57 PCT CUT IN COAL PRICE - REUTERS
Nippon Steel Corp has agreed with Australia's BHP Billiton Mitsubishi Alliance (BMA) to pay $128 to $129 per tonne for coking coal in the year from ...
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- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Planning Commission, India
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
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