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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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- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- Australian Coal Association
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
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