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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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Sunday, 01 November 09
THE COAL MOVEMENT TO INDIA FROM SOUTH AFRICA AND INDONESIA WOULD BE CONTINUE INCREASE - VISTAAR SINGAPORE
COALspot.com (Singapore): The BDI continued to be firm with an increase of 60 points and closed at 3,103 points.
The cape index also was firm an ...
Sunday, 01 November 09
INDONESIA ADARO Q3 NET PROFIT JUMPS ON COAL DEMAND
* Q3 net profit up 131.6 percent to 1.27 trillion rupiah
* Q3 revenue up 56.8 percent to 7.12 trillion rupiah
Reuters reported that, Indonesia' ...
Sunday, 01 November 09
PT INDIKA MAY BUY STAKES IN BHPB INDONESIA OPERATIONS
Dow Jones reported that Indonesian coal producer PT Indika Energy may buy stakes in BHP Billiton Limited's Indonesian coal operations and in local ...
Sunday, 01 November 09
ADAVALE RESOURCES MAKES COAL ACQUISITIONS IN INDONESIA
Adavale Resources Limited has entered into an agreement to acquire the rights to two thermal coal projects Tapan and Jambi in Sumatra Indonesia, hel ...
Saturday, 31 October 09
PRODUCERS BENEFIT FROM COAL'S TIGHT SUPPLY AND STRONG DEMAND
The Jakarta Post reported that, The outlook for Indonesian coal producers appears promising with strong volume growth coming from both the domestic ...
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- OPG Power Generation Pvt Ltd - India
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- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- CIMB Investment Bank - Malaysia
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- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
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- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
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- The University of Queensland
- CNBM International Corporation - China
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- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Indonesian Coal Mining Association
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- SMG Consultants - Indonesia
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- Minerals Council of Australia
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Chamber of Mines of South Africa
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- The State Trading Corporation of India Ltd
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- Economic Council, Georgia
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- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
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- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
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- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
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- Standard Chartered Bank - UAE
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- Medco Energi Mining Internasional
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- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
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- Bukit Baiduri Energy - Indonesia
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- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- MS Steel International - UAE
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
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- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
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- Kapuas Tunggal Persada - Indonesia
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- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
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- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
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- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
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- Ministry of Finance - Indonesia
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- Coal and Oil Company - UAE
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