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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, 10 June 10
R-POWER, INDONESIA'S SUGICO INK PACT TO ACQUIRE COAL MINES - ECONOMIC TIMES
Economic Times of India reported that, Anil Ambani-owned Reliance Power has signed a share-sale agreement with Indonesia’s Sugico Group to acq ...
Thursday, 10 June 10
PARAMOUNT MINING CORPORATION REPORTS KEY INDONESIAN JV AGREEMENT
Indonesia focussed Paramount Mining Corporation has reported that its Indonesian subsidiary, PT Paramindo, has concluded a Joint Venture Agreem ...
Wednesday, 09 June 10
INDIA, CHINA TO PROP UP THERMAL COAL DEMAND - COMMODITY ONLINE
Commodity Online : Weakness in thermal coal demand in OECD will continue to be offset by growth in demand in India and China. Therefore, the s ...
Tuesday, 08 June 10
TATA POWER LOOKING TO PICK UP STAKE IN OVERSEAS COAL MINES - ECONOMIC TIMES
Economic Times reported that, Tata Power is looking for a strategic stake purchase in coal mines of Indonesia or South Africa to fuel its upcoming 1 ...
Tuesday, 08 June 10
RUSSIA REPORTED A TENFOLD GROWTH IN COAL EXPORTS TO CHINA IN 1Q 2010 - BRS
A retreat for all the dry bulk segments this week, but especially for the Panamax and Supramax markets. The Panamax 4TC remains over US$30,000/day h ...
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- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
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