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