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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, 01 April 10
PROFIT AT TWO INDONESIAN COAL MINERS SOARS AS RECOVERY STIRS GREATER DEMAND, HIGHER PRICES - THE JAKARTA GLOBE
The Jakarta Globe reported that, Two of the country’s biggest coal producers enjoyed a surge in profit last year as prices rose and demand pic ...
Thursday, 01 April 10
BHP BILLITON TO SELL STAKE IN MARUWAI TO ADARO - THE JAKARTA POST
The Jakarta Posted reported that, BHP Billiton has agreed to sell 25 percent of its stake in the Maruwai Coal Project in Kalimantan to Indonesia&rsq ...
Thursday, 01 April 10
AUSTRALIAN COAL PRODUCER REJECTS $3 BILLION PEABODY OFFER - STL TODAY
STL today reported that, Australian coal producer Macarthur Coal Ltd. rejected a $3 billion cash takeover bid from Peabody Energy Corp., which seeks ...
Thursday, 01 April 10
TATA POWER EYES MORE COAL FROM INDONESIA FOR ITS FUTURE PLANTS - FINANCIAL EXPRESS
Financial Expressreported that, Tata Power, one of the largest private sector power utilities in the country with interests in generation, transmiss ...
Wednesday, 31 March 10
COAL INDIA MULLS JOINT VENTURE WITH RIO TINTO AND PEABODY - DNA
DNA reported that, Coal India Ltd. (CIL) has finalised two key contenders for its international joint venture (JV) in Australian and US each. The co ...
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- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- Australian Coal Association
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
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