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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, 04 February 10
COAL PRODUCTION EXPECTED TO REACH 280 MILLION METRIC TONS - INDONESIA UPDATE
Indonesia`s coal production target for 2010 has been set at 275 million to 280 million metric tons, according to the Association of Indonesian Coal ...
Thursday, 04 February 10
MASSEY CEO 'NOT EXCITED' ABOUT PROSPECT OF QUARTERLY COAL PRICING
US coal producer Massey Energy is not in favour of switching to a quarterly pricing schedule for metallurgical coal, from the current annual price b ...
Thursday, 04 February 10
BUKIT ASAM GOES SHOPPING FOR MORE COAL MINES
State-owned coal miner PT Tambang Batubara Bukit Asam has set aside Rp 1.5 trillion ($162 million) to acquire two coal mines in East Kalimantan, pre ...
Thursday, 04 February 10
PTT EYES OVERSEAS COAL
Revenue could reachUS$600 million a year
PTT Plc, Thailand's largest energy company, aims to raise the annual revenue from its overseas coal bus ...
Thursday, 04 February 10
RI TO GRADUALLY STOP COAL EXPORTS
Indonesia, which over the past few years has become the world`s third largest coal exporter after Australia and China, is planning to gradually stop ...
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- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Planning Commission, India
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Parliament of New Zealand
- VISA Power Limited - India
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