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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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Tuesday, 07 July 09
Q+A - INDONESIA MINING SECTOR FACES ELECTION RISKS - REUTERS
Indonesia has struggled to lure foreign investment to its mining sector in recent years, and the nationalist line on resource exploitation taken by ...
Tuesday, 07 July 09
INDIKA ENERGY COMPLETES THE ACQUISITION OF PETROSEA
TAMBANG reported that, PT Indika Energy, Tbk has officially announced that it has completed the acquisition of PT Petrosea, Tbk. from Clough Interna ...
Tuesday, 07 July 09
RUSSIAN AUDITORS ATTACK COAL EXPORTERS OVER PRICING
Russia's budget is losing substantial revenues because the country's exporters ship coal overseas at artificially low prices through various offsh ...
Tuesday, 07 July 09
RBCT COAL EXPORTS TO REMAIN BELOW CAPACITY IN 2009
Coal volumes railed to South Africa’s Richards Bay Coal Terminal are continuing to fall far short of the corridor’s nameplate yearly cap ...
Tuesday, 07 July 09
TATA POWER AID THE INDONESIAN COAL MINES
BL reported that Mr Prasad Menon MD of TATA Power aid the Indonesian coal mines PT Kaltim Prima Coal and PT Arutmin Indonesia in which TATA Power ha ...
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- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
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