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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, 04 February 11
ADARO ENERGY FY10 COAL SALES UP 6 PERCENT TO 43.84 MILLION
As reported by insider stories, Indonesian coal miners PT Adaro Energy Tbk has produced 42.20 million tons of coal in 2010, a 4 percent increase com ...
Thursday, 03 February 11
MERCATOR LINES TO INVEST RS 200-250 CRORE ON COAL MINE IN INDONESIA - ECONOMIC TIMES
Economic Times reported that, Mercator Lines, the HK Mittal-controlled shipping-to-mines major, will invest about 200-250 crore (US$ 43.825 - 54.781 ...
Thursday, 03 February 11
DRY BULK MARKET LOOKS SET TO BOTTOM OUT NIKOS - ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market having lost more than 72% of its value in the last month or so and having retreated to a 2-year low, it seems that the bott ...
Wednesday, 02 February 11
INDONESIA MAY MISS COAL EXPORT TARGET IN 2011
COALspot.com - Indonesian Trade ministry has instructed independent surveyors temporarily not to issue pre-shipment survey report (LS) to the compan ...
Wednesday, 02 February 11
BAYAN TO SUPPLY COAL TO TP UTILITIES LTD
Insider Stories has reportd that, Indonesia's one of the leading coal miner PT Bayan Resources Tbk (BYAN) owned by businessman Dato' Low Tuck ...
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- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Aditya Birla Group - India
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
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