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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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Tuesday, 20 April 10
INDO HARUM ENERGY WINS US$200MN LOAN PLEDGE FROM BANK SYNDICATE
Indonesian coal producer PT Harum Energy has secured a loan commitment of US$200 million from a syndicate of six banks.
Bank of Tokyo Mitsubishi ...
Tuesday, 20 April 10
PACIFIC SUPRA MARKET WAS STILL SOFTENING - BRS
A modest increase in dry bulk rates this week with activity picking up in the middle of the week. Panamax rates remain above the Capes, and there wa ...
Monday, 19 April 10
IS CHINA TO SUFFER NEW COAL SUPPLY SHORTAGE IN 2010? - XINHUA
Is China likely to suffer a new coal supply shortage in 2010? It's a question haunting many Chinese market analysts now. After a string of several ...
Monday, 19 April 10
WHITE ENERGY BUYS SA COAL - ABC NET
ABC Net reported that, South Australian Coal Limited is being bought by the New South Wales company White Energy.
Shareholders will get a combine ...
Monday, 19 April 10
PLN TO OPERATE COAL MINES IN BID TO FUEL POWER PLANTS
The Jakarta Globe reported that, state electricity utility PT Perusahaan Listrik Negara said on Sunday that it aimed to take over operation of small ...
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- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Minerals Council of Australia
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
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