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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, 07 January 10
INDONESIAS COAL OUTPUT MAY RISE TO 309 MILLION TONS IN 2014 - BLOOMBERG
Indonesia’s coal production may rise to 309 million tons by 2014 from an estimated 250 million tons this year, Bambang Setiawan, director-gene ...
Wednesday, 06 January 10
RICHARDS BAY SAYS 46% OF COAL EXPORTS WENT TO EUROPE
Richards Bay Coal Terminal, through which almost all of South Africa’s coal exports are routed, said 46 percent of the coal it exported in 200 ...
Wednesday, 06 January 10
CHINA-AUSTRALIA INVESTMENT TIES SEEN IMPROVING IN 2010
Australia and China showed a united front in a bid to improve investment ties as they signed a $3-billion coal deal on Wednesday, following a rocky ...
Wednesday, 06 January 10
INVESTMENT IN MINING TO TOP $2.5B IN 2010
The government plans to invest US$2.5 billion in the mining sector, an official said Tuesday.
Bambang Setiawan, the director general of mineral r ...
Wednesday, 06 January 10
SAS 2009 COAL EXPORTS THROUGH RBCT FLAT AT 61MT
Exports through South Africa’s Richards Bay Coal Terminal (RBCT) remained flat in 2009, as the terminal faced “critical business challen ...
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- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Planning Commission, India
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