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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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Saturday, 15 January 11
MAKE SACRIFICES TO SAVE PLN, INDONESIA GOVT BEGS MINERS - THE JAKARTA GLOBE
The Jakarta Globe reported that, Darwin Zahedi Saleh, Indonesia's minister of energy and mineral resources, on Friday appealed to local coal compan ...
Saturday, 15 January 11
RISING PRICES, GOVERNMENT DECREE LEAVE PLN AT LOGGERHEADS WITH COAL FIRMS - THE JAKARTA GLOBE
The Jakarta Globe reported that, As coal prices continue to increase, state utility Perusahaan Listrik Negara faces problems in securing enough coal ...
Thursday, 13 January 11
SURGING COAL PRICES UNDERMINE PLN'S EFFICIENCY PROGRAM - THE JAKARTA POST
The Jakarta Post reported that, The soaring global coal prices are undermining state electricity company PT PLN's pledge to improve its operational ...
Thursday, 13 January 11
SPML INFRA TO DOUBLE INDONESIA COAL MINE OUTPUT IN TWO YEARS - DNA INDIA
DNA India reported that, Kolkata-based infrastructure company SPML Infra, formerly Subhash Projects & Marketing Ltd, will in two years nearly do ...
Thursday, 13 January 11
DRY BULK RATES HIT NEW MULTI-MONTH LOWS ON AUSTRALIAS FLOODS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Floods in Australia’s Queensland has seriously disrupted coal shipments and together with a flood of vessels has pushed freight rates for dry ...
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- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Sojitz Corporation - Japan
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- GMR Energy Limited - India
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
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