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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, 27 April 11
KEWESPO CALLS FOR 765KT OF THERMAL COAL
COALspot.com - South Korea's East-West Power Co's (KEWESPO) has issued a tender to buy total 765,000 tonnes of thermal coal for delivery between J ...
Wednesday, 27 April 11
HARUM ENERGY TO PAY RP 659.1B IN DIVIDENDS - THE JAKARTA POST
The Jakarta Post reported that, Indonesian coal miner Harum Energy is planning to pay out Rp 659.1 billion (US$76.46 million) in dividends this year ...
Wednesday, 27 April 11
TSIS $5 MILLION PLANT TO START PRODUCING UPGRADED COAL - THE JAKARTA POST
The Jakartapost reported that, PT Total Sinergy International (TSI), in association with Agritrade Resources Limited of Hong Kong, will upgrade its ...
Wednesday, 27 April 11
RAIN CONSIDERS COAL MINES TAKEOVER - INSIDER STORIES
Indonesian's tenth largest coal miner in term of coal concession, PT Resource Alam Indonesia Tbk (KKGI), is considering to acquire several coalmine ...
Wednesday, 27 April 11
DRY BULK MARKET LACKS ACTIVITY, RATES KEEP RETREATING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the Easter Holidays for a large of the world now behind, the dry bulk market kept lacking activity on Tuesday, which led the Baltic Dry Index ( ...
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- Central Electricity Authority - India
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
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