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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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Friday, 13 February 09
INDONESIA IS EXPECTED TO PRODUCE 225 MILLION TONES OF COAL IN 2009 - ENERGY MINISTRY
Indonesia, the world's top thermal coal exporter, will allocate 68.3 million tonnes of coal out of expected forecast production of 225 million ton ...
Friday, 06 February 09
INDONESIA'S COAL PORTS HAVE FORCED A RETHINK ON 'TRADITIONAL' HANDLING OPTIONS
Port Strategy reported that, Indonesia’s main coal-producing islands of Kalimantan, Sulawesi and Sumatra suffer from a scarcity of suitable la ...
Thursday, 22 January 09
MINISTER: MINING LAW PROHIBITS RAW MATERIAL EXPORT - ESDM
The Coal and Mining Law, approved during the House of Representatives plenary meeting on December 16, 2008 seeks to domestically increase mining com ...
Wednesday, 07 January 09
SOUTH KALIMANTAN COAL PRODUCTION EXPECTED TO INCREASE - ESDM
Coal production from the South Kalimantan region has the potential to increase in the next few years. Aside from the vast proven reserves of coal, s ...
Tuesday, 30 November 99
GLENCORE EXPECTS 2023 TRADING UNIT PROFITS OF UP TO $4 BLN - REUTERS
Glencore GLEN.L on Friday said it expects profits at its trading division this year of up to $4 billion, exceeding its long-term annual guidance.
...
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- Orica Mining Services - Indonesia
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- PTC India Limited - India
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Planning Commission, India
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
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