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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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Wednesday, 11 November 09
INDONESIA ASKS DOMESTIC COAL FIRMS TO SET ASIDE 30PCT OF OUTPUT
Indonesian government said that it had asked domestic coal producers to set aside 30% of their output next year to meet demand from new coal fired p ...
Wednesday, 11 November 09
MINING ACQUISITIONS BECOMING MORE STRATEGIC - E&Y
Mining Weekly reported that, Although miners around the world are looking to position themselves for growth, companies are being more selective when ...
Tuesday, 10 November 09
THAI COAL MINER BANPU Q3 NET UP, BEATS FORECAST
Reuters reported that, Thailand's top coal miner, Banpu, said on Tuesday its third-quarter net earnings rose a higher-than-expected 22 percent, hel ...
Monday, 09 November 09
NAPOCOR DEFERS 50,000 T COAL TENDER
Top Philippine electricity producer National Power Corp. (Napocor) has indefinitely postponed a tender for supply of 50,000 tons of steam coal sched ...
Monday, 09 November 09
SAM'S SEAFOOD HOLDINGS SET TO COMMENCE DRILLING AT INDONESIAN COAL PROJECT
Proactive Investors reported that, Sam's Seafood Holdings is preparing to kick off diamond drilling at the company's Indonesian coal project after ...
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- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Minerals Council of Australia
- SMC Global Power, Philippines
- White Energy Company Limited
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
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