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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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Thursday, 25 August 11
OPG EXPECTS COAL PRICES TO REMAIN FIRM IN THE SHORT TERM
COALspot.com - Revenue of OPG, the developer and operator of Group Captive power plants in India up 188% to £33.15m and Income from continuing ...
Thursday, 25 August 11
PAITON POWER LOOKING FOR 3.96 MILLION TONS OF COAL
COALspot.com - PT Pembangkit Jawa Bali (PJB) is looking for 3.96 million tons coal with calorific value 4,800 kcal/kg on as received basis. Accordin ...
Tuesday, 23 August 11
ICMA CALLS GOVERNMENT TO REVIEW EXPORT BAN REGULATION
COALspot.com - Chairman of the Indonesian Coal Mining Association (ICMA) Bob Kamandanu asks the government to review the regulation that being draft ...
Tuesday, 23 August 11
ADARO ENERGY ACQUIRES 75% STAKE OF PT MUSTIKA INDAH PERMAI FOR US$ 222.5 MILLION
COALspot.com - PT Alam Tri Abadi, a wholly owned subsidiary of PT Adaro Energy Tbk, signed a share purchase agreement to acquire a 75% stake of PT M ...
Tuesday, 23 August 11
COAL DEMAND IS REMAINED STRONG IN SPITE OF CURRENT GLOBAL ECONOMIC UNCERTAINTY - BUMI
COALspot.com - Indonesia's largest coal producer, PT Bumi Resources, Tbk (BUMI)'s sales revenue has increased to US$1.79 billion (compared with US ...
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- Tata Chemicals Ltd - India
- White Energy Company Limited
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- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
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- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Planning Commission, India
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
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