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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, 20 August 09
INDONESIA'S DELTA DUNIA BUYS COAL FIRM FOR $550 MLN
* Delta Dunia to acquire BUMA for $550 million
* Expect to complete the deal in the fourth quarter of 2009
* Delta Dunia has appointed Barclays Ca ...
Thursday, 20 August 09
MUNDRA PORT BAGS MORMUGAO PORT COAL TERMINAL DEVELOPMENT CONCESSIONS
NDTV reported that, Mundra Port and Special Economic Zone (Mundra Port) the largest private port in India has won the bid for the development of coa ...
Thursday, 20 August 09
INDONESIA'S BUKIT ASAM SET FOR MINE ACQUISITIONS
* Allocates $150 million for coal mine acquisitions
* Expects one deal to be completed by the end of 2009
Reuters world's largest international ...
Thursday, 20 August 09
INDONESIAN COAL EXPORT LESSENS IN FIRST SEMESTER
Domestic coal use has grown by five million tons.
Viva News reported that, Domestic coal export up until the first half of 2009 decreased by four ...
Wednesday, 19 August 09
STEAM COAL PRICES ARE SINKING - THE GERMAN COAL IMPORTERS ASSOCIATION
COALspot.com (German): Oversupply in the World Market. In 2Q 2009 the steam coal prices sank massive in comparison to the previous years quart ...
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- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
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