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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, 23 March 09
STRAITS TO SELL STAKE IN COAL ASSETS TO PTT -THEAUSTRALIAN.NEWS.COM
STRAITS Resources will sell a 60 per cent stake in its Indonesian coal assets to Thailand's PTT International Co. for $US335 million.
The transa ...
Monday, 23 March 09
BMA TAKES 60 PCT CUT IN JAPAN COKING COAL PRICE-CITI - REUTERS
BHP Billiton Mitsubishi Alliance (BMA), the world's top coking coal exporter, has agreed to accept a discount of around 60 percent for the steel-ma ...
Sunday, 22 March 09
SHENHUA ENERGY'S 2009 COAL PRODUCTION MAY GAIN 8% - BLOOMBERG
China Shenhua Energy Co., the nation’s biggest coal producer, may increase production of the energy fuel by about 8 percent this year, slower ...
Friday, 20 March 09
INDONESIA ORDERS TEMPORARY HALT AT BAYAN COAL MINE - REUTERS
Indonesia has ordered a coal mining unit of PT Bayan Resources to temporarily stop production for operating outside approved areas, a government off ...
Friday, 20 March 09
COKING-COAL PRICE STRUCK AT $115-$125, CITIGROUP SAYS - BLOOMBERG
BHP Billiton Ltd., the world’s largest miner, agreed with Nippon Steel Corp. to benchmark coking coal prices of $115 to $125 a metric ton, Cit ...
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- Formosa Plastics Group - Taiwan
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- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
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- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
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- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
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- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
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- Barasentosa Lestari - Indonesia
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- PNOC Exploration Corporation - Philippines
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- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
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- Australian Coal Association
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- Bukit Baiduri Energy - Indonesia
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- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
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- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
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- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
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- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
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- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
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- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
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- Sarangani Energy Corporation, Philippines
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- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
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- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
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- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
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- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- The University of Queensland
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
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- South Luzon Thermal Energy Corporation
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- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
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