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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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Sunday, 05 September 10
HARUM ENERGY EYES 7.4 MILION TONS OF COAL OUTPUT IN 2010
Indonesia's coal miner PT Harum Energy Tbk, controlled by Indonesian tycoon Kiki Barki, is eyeing 7.4 million tons of coal production in 2010, a 27 ...
Sunday, 05 September 10
THE FREIGHT MARKET WAS BIT VOLATILE WITH NO CLEAR INDICATION OF THE MARKET - CAPT REDDY
COALsopot.com: The freight market was bit volatile with no clear indication of the market.
However the BDI continued the upward trend mainly due ...
Sunday, 05 September 10
NOROCHCHOLAI POWER PLANT TO BE COMMISSIONED ON JANUARY 1
Daily news reported that, the Norochcholai coal power plant will be commissioned on January 1, 2011 adding 300 megawatts to the national power grid ...
Friday, 03 September 10
BANPU CUTS INDONESIAN HOLDING BUT ITM REMAINS KEY STRATEGIC UNIT - BANGKOK POST
"SET-listed Banpu Plc, Asean's largest coal miner, yesterday announced the sale of an 8.72% stake in its listed coalmining holding company in ...
Friday, 03 September 10
NALCO, INDONESIAN FIRM DIFFER ON COAL SUPPLY TO SMELTER - DNA INDIA
A few days ago, National Aluminium Company (Nalco) advertised in Indonesian newspapers asking for companies to bid for coal supplies for its 500,000 ...
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- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Australian Coal Association
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
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